Peter Huntsman said a recent debt restructuring has Huntsman Corp. positioned for a solid future - a future that's likely to include an initial public offering or merger with a publicly held company.
``We've been through a lot, but we're cash-flow-positive today,'' said Huntsman, who took control of the firm founded by his father, Jon Huntsman Sr., less than three years ago.
The restructuring reduced the Salt Lake City-based plastics and chemicals firm's debt by $775 million. ``We're saying we're not just going to survive, we're going to prosper,'' he said.
But the restructuring came at a price. MaitlinPatterson Global Opportunities Partners, a New York investment firm that had been Huntsman's largest bondholder, now holds an equity stake of about 49 percent in Huntsman, along with two seats on the company's nine-member board. It's the largest stake held by an outside investor in Huntsman's 32-year history.
Peter Huntsman pointed out that his family still controls about 51 percent of the company, as well as holding or appointing the remaining seven seats on the board. He admitted that Huntsman came perilously close to bankruptcy last year, as global chemicals markets soured and the firm and its assorted holdings missed a pair of debt payments.
``If not for three or four signature events, including 100 percent support from our banks, we would have been bankrupt,'' Peter Huntsman said. He also credited the efforts of his father, who had handed over the reins in mid-2000 to focus on philanthropy, most notably the Huntsman Cancer Institute at the University of Utah.
Since founding the institute in 1995, the Huntsman family has committed more than $200 million to the facility. A 50-bed hospital wing for the institute is under construction. Jon Huntsman Sr. has battled prostate and mouth cancer, both of which are in remission. His parents died from cancer-related illnesses.
``My father was very instrumental [in the financial restructuring],'' Peter Huntsman said. ``He knows when to use a silver glove and when to use a lead pipe, and that experience was important.''
The future may lie in foreign terrain for privately held Huntsman.
``I'd like to see us, in the next two to three years, be ready to trigger an IPO,'' Peter Huntsman said. ``We need access to public money to expand and grow and that will require a financing event, like an IPO or a merger with a public company. We recognize that we have a partner [in MaitlinPatterson] that wants to be cashed out in the next five to seven years.''
He added that such a move would allow the Huntsman family ``to be more aggressive in funding cancer research.''
``My father is 65 and I don't think he wants to be in his 70s and 80s and worrying about the next ethylene cycle,'' he said.
Ideally, Huntsman's sales would grow from $8.5 billion to $10 billion annually before an IPO-type move, he said. Plastics and polymers could be a big part of that growth, with the firm's Odessa, Texas, polyolefins plant receiving new machinery in 2003 as a result of a 40 percent increase in capital spending made possible by the refinancing.
Huntsman Polymers Corp., a unit consisting primarily of plastics and chemicals holdings in Odessa, lost almost $11 million in the first half of 2002 as sales dropped almost 19 percent, to $220 million, compared with the first half of 2002.
Selling the company as a whole might be a bit challenging, however, according to an industry contact who said Huntsman's individual pieces probably are worth more than the firm is as a combined entity.
``You have to ask yourself who would buy a company with detergents, basic chemicals, titanium dioxide, polypropylene - the list goes on and on,'' the contact said. ``It would take some really creative kitchen work for a buyer to make all of that work.''