SALT LAKE CITY (CN) – Top executives at Huntsman Corp. dumped 57 million shares for $1.3 billion while propping up share price by concealing adverse information about the company, shareholders claim in Federal Court.
Also sued are Huntsman CEO Peter Huntsman, CFO J. Kimo Esplin, and Controller Russell Healy.
Huntsman announced in July 2007 that it had agreed to be acquired by Hexion Specialty Chemicals for $28 a share, or $10.6 billion, the plaintiffs say. Hexion is an affiliate of Apollo Management, a private equity firm.
“In the weeks and months following Huntsman’s announcement that it had signed a definitive merger agreement with Hexion, and with the company’s securities trading at artificially inflated prices, company insiders sold 57,082,420 shares of the company’s stock for gross proceeds of over $1.3 billion,” the complaint states.
“Then on June 19, 2008, the company shocked investors when it announced that Hexion had filed a lawsuit against Huntsman seeking to terminate the merger agreement. The suit filed by Hexion revealed that three of Huntsman’s five business segments had significantly underperformed relative to expectations, estimations and projections. …
“Huntsman disclosed the Hexion lawsuit to investors on June 19, 2008. On this news, the company’s shares fell $8 per share, or 38.35 percent, to close on June 19, 2008 at $12.86, on unusually heavy trading volume.”
Plaintiffs say the defendants failed to disclose that the Hexion merger proposal including a financing condition that had not been completed; that Huntsman had significantly understated its debt; that it significantly overstated its future earnings before the merger announcement, which dramatically declined after the announcement; among other things.
Plaintiffs are represented by Heather Sneddon with Anderson & Karrenberg.