Huntsman Corp. to sell stock

Salt Lake-based Huntsman Corp., the world's largest privately owned chemical producer, said Friday that as much as 30 percent of the company will be sold in an offering of common and preferred stock that will raise $1.3 billion for debt reduction.

About 51.1 million common shares at $21 to $23 each and 5 million preferred shares at $50 each will be sold, Huntsman said in a regulatory filing. Current investors will sell another 4.5 million shares, and underwriters will have an option for another 8.35 million shares.

Spokesman Don Olsen declined to comment on the timing of the offering.

Rising interest payments and restructuring costs widened Huntsman's net loss to $226.5 million in the first nine months of 2004 from $214.2 million a year earlier. Chief executive Peter Huntsman, 41, who took over for his billionaire father, Jon Huntsman Sr., in 2000, is cutting costs as higher energy and debt expenses erode the benefit of improved chemical demand.

Huntsman makes basic chemicals such as ethylene and propylene, polyethylene resins and titanium dioxide pigment, as well as specialty chemicals in its polyurethanes, performance products and advanced materials units. It employs 11,500 people.

About 215.9 million common shares will be outstanding after the offering and a reorganization of the company, Huntsman said in the filing with the U.S. Securities and Exchange Commission. The common shares will trade on the New York Stock Exchange with the ticker symbol HUN, and the preferred stock will trade as HUNPr.

Most of the proceeds from the stock offering will help pay down debt with interest rates ranging from 11.625 percent to 15 percent, the company said. About $39.4 million will be used to purchase U.S. Treasury notes as collateral for preferred dividend payments.

Debt rose 6.4 percent to $6.2 billion as of Sept. 30, from $5.83 billion on June 30, Huntsman said. The company had $239.1 million in cash.

The company's net interest expense jumped 76 percent to $459.5 million in the first nine months of the year, compared with $260.7 million a year earlier. During the same period, restructuring costs climbed to $202.4 million from $27.2 million as Huntsman shed workers and closed plants around the world.

An auditor found "a number of misstatements" in financial results for the period ended Sept. 30 that in aggregate were not material, the company said in the filing. Prior errors led Huntsman to restate earnings from 2001 through the six months ended June 30, 2004, the company said.

Jon Huntsman Sr., 67, founded the company in 1970 as a container maker. Huntsman created the Styrofoam "clamshell" boxes for McDonald's Big Mac hamburgers in 1974, and his acquisitions over the next two decades built the company into the fourth-largest U.S. chemical maker.

Huntsman doubled in size five years ago when the company acquired units of Imperial Chemical Industries Plc, financed partly with high- yield bonds that were below investment grade.

Revenue jumped 77 percent to $8.36 billion in the nine months ended Sept. 30, largely due to the consolidation of business units, Huntsman said.

The company's 2003 revenue of $9.25 billion ranked fourth behind Dow Chemical Co., the biggest U.S. chemical maker, DuPont Co. and Exxon Mobil Corp.

Huntsman employs about 11,500 people at 63 facilities in 22 countries, the company said in the filing.

Underwriters for the offering include Citigroup Inc., Credit Suisse First Boston LLC; Merrill Lynch & Co.; and Deutsche Bank Securities Inc., Huntsman said in the SEC filing.

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