Apollo commits $540m to portfolio company Hexion

The global buyout firm has agreed to provide equity and waive fees in support of Hexion’s $10.6bn merger with Huntsman. Last week, Hexion was ordered by a Delaware Court to comply with the buyout agreement in an effort to close.

Apollo Global Management has agreed to provide $540 million to portfolio company Hexion Specialty Chemicals to assist the company in closing the agreed $10.6 billion buyout of chemical manufacturer Huntsman.

Apollo also will waive its contractual right to a transaction fee from the merger and will suspend its monitoring fees from Hexion for three years.

Both the capital commitment and the fee waivers are contingent upon the deal closing.

A Delaware court last week ordered Hexion to “perform all of its covenants and obligations (other than the ultimate obligation to close)” in its agreed buyout of Huntsman.

Hexion’s claims that Huntsman has suffered a material adverse effect, as defined in the merger agreement, were rejected. The judge said that Hexion “knowingly and intentionally” violated the contract.

Following the court decision, Huntsman obtained in a Texas court a temporary restraining order against Credit Suisse and Deutsche Bank, preventing the banks from terminating their commitment to financing the merger or interfering with the transaction.

The temporary restraining order will remain in place pending a hearing on Huntsman’s request for a temporary injunction.

Last week, two major regulatory hurdles for the transaction were cleared as well. The European Union and the US Federal Trade Commission both completed their reviews of the transaction and granted antitrust clearance.

Huntsman continues to pursue damages of more that $3 billion in a Texas lawsuit against Apollo and the firm’s founders Leon Black and Joshua Harris.