![]() ![]() Judge Lamb looked at the entire Huntsman business to determine whether a MAC had occurred and thereby isolated the significant declines in Huntsman’s * A MAC determination is based on the business as a whole. Year-to-year performance is a better measure of a MAC. And he implied that he would have done so, even without this disclaimer language, as actual He refused to rely on these projections because of standard disclaimers about reliance on projections in the merger agreement. However, Judge Lamb refused to consider these projections, instead preferring a year-to-year comparison of results to ascertain a MAC. According to forecasts from Huntsman management, Huntsman’s EBITDA projections for 2008 have gone from $1.289 billion as of June 2007 to $863 billionĪt the time of trial, a significant decline. * Non-reliance language on projections has a broad application. It is a better measure of the operational results of a business for determining a MAC. Notably, Judge Lamb found that since EBITDA is independent of capital structure, Since Huntsman’s 2007 EBITDA was only 3 percent below its 2006 EBITDA and 2008 EBITDA will only be 7 percent below 2007 EBITDA. Tyson to describe a MAC as being a “significantly durational” adverse event “expected to persist in the future.” In Huntsman’s case, there was no MAC in its business, He relied heavily on Vice Chancellor Leo E. Judge Lamb noted in his opinion that no Delaware court had ever found for a buyer on a MAC claim. * A material adverse change, or MAC, is tough to prove. In the opinion are a number of lessons for deal lawyers: Instead ordering Hexion to comply with its obligations under the merger agreement to attempt to complete the merger. The court refused at this time to rule on Hexion’s claim that the combined company would be insolvent, Had sued to end its deal with Huntsman - had knowingly and intentionally breached the merger agreement. In his opinion, Judge Lamb found that Huntsman had not suffered a material adverse effect, and that Hexion Specialty Chemicals - which, along with its private equity backer, Apollo Management, Lamb ruled decisively for Huntsman in his 89-page opinion (as I predicted he would in my previous post, “Last Words From Huntsman and Hexion”). ![]()
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