ICI debtor skips payment

One of the world's biggest chemical companies - which owes Britain's ICI group £300m - last night said it is skipping interest payments on its debts and starting financial restructuring talks with its bondholders.

The Huntsman Corporation and its sister operation Huntsman Polymers are privately owned, US-based businesses. They have combined debts of $2.2bn (£1.5bn), according to credit rating agency Moody's.

Two years ago the family-controlled Huntsman group acquired the bulk chemicals business of ICI for £1.8bn. Huntsman paid all but £300m of the purchase price and ICI took a 30% stake in Huntsman International with an option to sell for £300m.

ICI has been in talks with Huntsman International - which produces polyurethane and tioxide - to cash in its stake and had hoped to have received the cash by now to help reduce its own £3bn debt mountain.

But it recently said that its carefully planned debt reduction programme might have to be rescheduled as it could be 2003 before it received its £300m from Huntsman.

Peter Huntsman, president of Huntsman Corporation, said the US chemical industry was "struggling through the worst economic conditions in its history" but insisted the business had a strong future.

Last night, as Huntsman announced its refinancing plans, ICI's shares closed down 10.25p at 401.5p. A spokesman said only that talks about the sale of the Huntsman International stake were continuing.

A source close to the firm played down the potential impact of Huntsman's problems. He said: "It is not a mega-crisis. It is not insignificant, it is £300m out of £3bn, but ICI can cover its debt payments and it is not the end of the world."

Huntsman International, based in Brussels, continues to show strong profits. It is the largest part of the family empire, which has annual revenues of $8.bn and 14,000 employees.

ICI has recently announced 1,300 job cuts as part of a £180m restructuring programme. Most of the jobs to be cut are overseas but some 275 will be UK employees. The new redundancies come on top of the 1,400 job losses within the group already this year.