Huntsman Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Note 4 - Discontinued Operations and Business Dispositions

Note 4 - Discontinued Operations and Business Dispositions

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

4. DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS 

S aLE of India-based do-it-Yourself consumer adhesives business

On November 3, 2020, we completed the sale of the India-based DIY business to Pidilite Industries Ltd. and received cash of approximately $257 million. Under the terms of the agreement, an earnout provision of up to approximately $28 million of additional cash was attainable if the business achieved, within 18 months, certain sales revenue targets in line with the DIY business' 2019 performance. The performance criteria of the earnout provision were satisfied in the second quarter of 2021, and we received the full payment of $28 million. As a result, we recognized an additional pretax gain of $28 million in the second quarter of 2021, which was recorded in gain on sale of India-based DIY business in our condensed consolidated statements of operations.

SaLE of Venator InterEST

On December 23, 2020, we completed the sale of approximately 42.4 million ordinary shares of Venator Materials PLC (“Venator”) and received approximately $99 million in cash. Subsequent to this sale of ordinary shares, we no longer account for our current remaining ownership interest in Venator as an equity method investment, but rather as an investment in equity securities that are marked to fair value with changes in fair value reported in earnings. Concurrently with the sale of ordinary shares, we entered into an option agreement, pursuant to which we granted an option to funds advised by SK Capital Partners, LP to purchase the remaining approximate 9.7 million ordinary shares we hold in Venator at $2.15 per share. The option will expire on June 23, 2023 and will not be exercisable so long as such exercise would result in a default or an "Event of Default" under Venator’s Term Loan Credit Agreement and Revolving Credit Agreement. We record this option at fair value with changes in fair value reported in earnings.

For the three months ended September 30, 2021 and 2020, we recorded net (losses) gains of $( 3) million and $6 million, respectively, and for the nine months ended September 30, 2021 and 2020, we recorded net losses of $28 million and $100 million, respectively, to record our investment in Venator and related option to sell our remaining Venator shares at fair value. These net (losses) gains were recorded in “Fair value adjustments to Venator investment” in our condensed consolidated statements of operations.

Summarized financial information of Venator for the three and nine months ended September 30, 2020 is as follows (in millions):

	*Three months*			*Nine months*
	*ended*			*ended*
	*September 30,*			*September 30,*
	*2020*			*2020*
Revenues	$	474		$	1,462
Gross profit		20			126
Loss from continuing operations		(39	)		(48	)
Net loss		(39	)		(48	)
Net loss attributable to Venator		(42	)		(54	)

Sale of Chemical Intermediates Businesses

On January 3, 2020, we completed the sale of our chemical intermediates businesses, which included PO/MTBE, and our surfactants business (“Chemical Intermediates Businesses”) to Indorama Ventures Holdings L.P. (“Indorama”) in a transaction valued at approximately $2 billion, comprised of a cash purchase price of approximately $1.92 billion and the transfer of approximately $72 million in net underfunded pension and other post-employment benefit liabilities. In connection with this sale, we recognized a net after-tax gain of $748 million in the first nine months of 2020. Also, in connection with this sale, we entered into long-term supply agreements with Indorama to supply us with certain raw materials at market prices.

The following table reconciles major line items constituting pretax income of discontinued operations to after-tax income of discontinued operations as presented in our condensed consolidated statements of operations (dollars in millions):

	*Three months*					*Nine months*
	*ended*					*ended*
	*September 30,*					*September 30,*
	*2021*			*2020*		*2021*			*2020*
Major line items constituting pretax income of discontinued operations(1):
Trade sales, services and fees, net⁽²⁾	$	—		$	—	$	—		$	7
Cost of goods sold⁽²⁾		—			—		—			11
Gain on sale of the Chemical Intermediates Businesses		—			—		—			978
Insurance proceeds		—			—		—			48
Other (income) expense items, net		—			—		(2	)		1
Income from discontinued operations before income taxes		—			—		2			1,021
Income tax expense		(5	)		—		(5	)		(239	)
Net (loss) income attributable to discontinued operations	$	(5	)	$	—	$	(3	)	$	782

(1)	Discontinued operations include our Chemical Intermediates Businesses, our Australian styrenics operations and our North American polymers and base chemicals operations for all periods presented.

(2)	Includes eliminations of trade sales, services and fees, net and cost of sales between continuing operations and discontinued operations.