In a bizarre financial spat, three holders of Huntsman Polymers Corp.'s corporate debt attempted to force the company into involuntary bankruptcy Feb. 27, but ceased the effort a day later.
The filing, in U.S. Bankruptcy Court in Wilmington, Del., came from Costa Brava Partnership, Iggy LLC and Western Financial Co. Combined, the firms hold $1.5 million - or less than 1 percent - of Huntsman Polymers' $174 million corporate debt.
In a Feb. 28 news release, Huntsman Polymers President and Chief Executive Officer Peter Huntsman described the filing as ``totally without merit.''
``Huntsman Polymers ... has been doing business as normal ... and paying all its trade creditors on time and in full,'' he said. ``We are hopeful that we can put the whole unfortunate matter aside and get on with our business.''
No information about Costa Brava, Iggy or Western Financial was available at press time.
Huntsman spokesman Don Olsen said he had no information on why the action was withdrawn, adding that the matter has been turned over to the firm's bond counsel.
Olsen further said Huntsman had no contact with any of the three minor bondholders before they filed their action.
Late last year, officials at Huntsman Polymers - a maker of polyethylene, polypropylene and specialty plastics in Odessa, Texas - said the firm would miss its Dec. 1 corporate debt payment. At the same time, officials at the unit's corporate parent, Huntsman Corp. of Salt Lake City, said their firm would miss a similar payment Jan. 1.
Huntsman Polymers currently is working to restructure its debt with Credit Suisse First Boston, the firm that holds 73 percent of that debt, Olsen said.
He was not sure when Huntsman Polymers' next debt payment was due.
Full-year 2001 results for Huntsman Polymers were unavailable. Through September, the firm had lost $35 million from ongoing operations and another $140 million in a one-time expense related to plant closing and restructuring. Its nine-month sales mark of $381 million was down 24 percent from the same period in 2000.
Total Huntsman Corp. sales were $8.5 billion in 2001, unchanged from the previous year.
Olsen said early 2002 results are encouraging for both Huntsman Polymers and Huntsman Corp., as the parent firm implements a restructuring that will eliminate 700 jobs and save at least $125 million a year.
``We've begun to come out of the doldrums and see the benefits of [the restructuring],'' Olsen said. ``Our cash flow has shown a steady increase. That's the reason why this [bankruptcy] petition came out of the blue.''
Olsen added that Huntsman continues to hold discussions with equity investment firms Blackstone Capital Partners and Bain Capital LLC about potential investments in Huntsman Corp. He declined to provide details, but said Huntsman has been in more frequent contact with Bain than with Blackstone in recent months.