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Posted 08 Dec 2001   For week ended December 07, 2001
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Sent on Mormon-News: 03Dec01

By Kent Larsen

Huntsman Will Miss Bond Payment

SALT LAKE CITY, UTAH -- Huntsman Corp., the group of companies owned by LDS billionaire Jon Huntsman and his family, announced Friday that it will not make interest payments on its corporate bonds in December and January. In a filing with the Securities and Exchange Commission, the company blamed the missed payments on an industrywide downturn that included weak demand, heavy competition and high energy costs. The company's difficulties have been known at least since early August, when Forbes magazine reported that Huntsman was in "a very tight spot."

Huntsman spokesman Don Olsen explained that the difficulty is industrywide, "You cannot look at any chemical company's financial statements without seeing the horrible, horrible conditions that exist for the entire industry." And Kyle Loughlin, chemical industry analyst at Standard &Poor's, indicated that the situation at Huntsman is very bad, "The company's financial profile has deteriorated throughout the past year under the weight of onerous debt levels, very weak liquidity and the continuation of a severe operating trough in the domestic petrochemical sector."

Standard &Poor's has downgraded the company's bonds four times this year, most recently on Friday, after the company announcement, when it gave the bonds a CC rating. Standard and Poor's only has one other rating, D, that is lower than Huntsman's current CC rating. The bond ratings influence the current value of the bonds when they are sold in the market and the interest rate that Huntsman will have to pay on any new bonds issued.

In its August 6th issue, Forbes said Huntsman had $5 billion in long-term debt, and was having to make $189 million in interest payments each year. It also blamed some of Huntsman's difficulties on its 1999 purchase of business lines from British chemical giant, Imperial Chemical Industries. According to the Forbes report, Huntsman had sold a 20% stake in the company to Boston-based venture capital firm Bain Capital, which was run by fellow LDS Church member Mitt Romney until he became head of the Salt Lake Organizing Committee.

Huntsman has sold some assets and laid-off workers at some of its plants in an effort to continue to meet its interest payments. Those layoffs apparently included at least 700 workers and may include up to 20% of its 14,000 employees worldwide. Only about 30 Huntsman employees work in Salt Lake City, and most are spread among 42 countries outside the United States and Canada. The company has annual revenues from all subsidiaries of $8.4 billion.

Last Monday Huntsman said it had received a commitment for up to $150 million in financing from giant international bank Deutsche Banc Alex. Brown. But the bank won't allow Huntsman to use the money to pay bondholders. The interest payments for its Huntsman Polymers debt are due tomorrow (December 3rd) and the payments on the parent company debt are due January 1st.


Huntsman Can't Pay On Bonds
Salt Lake Tribune 1Dec01 US UT SLC B4
By Lesley Mitchell: Salt Lake Tribune


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