SecProbe.io

CORRESP
1
filename1.htm

[Stoel Rives LLP Letterhead]

  NATHAN W. JONES

  Direct (801) 578-6943

  nwjones@stoel.com

June 26, 2009

SENT
VIA EDGAR TRANSMISSION, FACSIMILE AND EXPRESS COURIER

United
States Securities and Exchange Commission

Division
of Corporation Finance

100
F Street, N.E.

Washington,
D.C.  20549-7010

Room 7010

Attn:       Terence O’Brien,
Branch Chief

Melissa
N. Rocha, CPA

Re:          Huntsman International LLC

File No. 333-85141

Huntsman Corporation

File No. 001-32427

Form 10-K for the Year Ended December 31,
2008

Ladies
and Gentlemen:

On
behalf of Huntsman Corporation and Huntsman International LLC, we are
submitting this correspondence in response to the comments provided in your
letter dated June 2, 2009 with respect to the Huntsman Corporation and
Huntsman International LLC (collectively, the “company”) Annual Report on Form 10-K
referenced above (the “2008 10-K”). For your convenience, we have repeated each
of your comments below in the order presented in your letter, followed by the
company’s response.

Management’s
Discussion and Analysis of Financial Condition and Results of Operations
Overview, page 63.

1.             We note your
discussion regarding the fourth quarter decreases in average selling prices and
sales volumes.  We further note that as a
result of this decline in selling prices, you recognized a charge to write down
inventory during the fourth quarter 2008 and your margins have continued to
decrease over the past three years.
Please expand discussion, in future filings, to clarify the specific
impacts and risks of recent economic events to your business.  Enhance your overview discussion of how the
market for your products has been affected and the current and expected future
impact on your operations, financial position and liquidity.  This disclosure should provide detailed
information on your customers, recent order activity, expected trends,
management’s response for managing these events, potential future actions by
management and other detailed information.
Expand your liquidity discussion to address the expected impact to
current and future cash flows and how you expect recent economic events,
including the credit shortage, may affect other sources of liquidity such as
your current debt instruments, credit ratings and related covenants compliance.  In your response to this letter, please
provide a detailed description of proposed future disclosure.

Response:

The
company agrees that in future filings it will expand its discussion regarding
the impact of economic events and market conditions on its business.  Specifically, the company will expand the Overview disclosure in Management’s
Discussion and Analysis of Financial Condition and Results of Operations to
provide additional disclosure with respect to the impact of economic conditions
on the company’s operations, financial position and liquidity. Consistent with
the foregoing, the company will add an Outlook
subsection within its Overview
disclosure. In this subsection, the company will provide additional information
on material aspects of demand, including with respect to recent customer order
activity, known trends and uncertainties concerning customer activity and
management’s response to economic conditions.

The
company notes that it disclosed its expectation that the difficult economic
conditions in which it operated during 2008 would continue in the short-term,
and further disclosed management’s response to these conditions (for example,
the company’s 2009 cost reduction initiatives) on pages 63 and 64 of the
2008 Form 10-K.

With
respect to customers and order activity, the company notes that it disclosed
its customer order activity (sales volumes) in a table on page 73 of the
2008 Form 10-K. The company further notes that it sells products to
approximately 12,500 different customers and no single customer makes up more
than 2% of its revenues. Accordingly, the company believes that disclosure regarding
specific customers is not material. Notwithstanding this, however, the company

2

acknowledges
that “macro” information regarding customer activity is important and agrees
that it will provide enhanced disclosure concerning customer activity.

The
company further agrees that it will provide additional disclosure in future
filings on material aspects of liquidity, including with respect to known
trends and uncertainties relating to economic conditions and the company’s
debt, credit ratings and compliance with covenants. In the company’s Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2009
(the “Q1 2009 10-Q”), Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations,
Liquidity and Capital Resources, Transactions Affecting our Senior Credit
Facilities, beginning at p. 69, the company provided enhanced
disclosure concerning the financial covenant in its senior credit facilities
and will continue to focus on such disclosure in future filings.

Liquidity
and Capital Resources, page 82

Compliance
with Covenants, page 88

2.             We note you
have no borrowings outstanding on your Senior Credit Facility at December 31,
2008 but do have outstanding letters of credit under this agreement.  You also disclose that this agreement
contains one financial convent, the Secured Leverage Ratio, however, you have
not made an affirmative statement of whether or not you have passed your
covenant at December 31, 2008.  We
note that in April 2009, you obtained a waiver to the credit agreement
covenants that will be effective through June 2010.  For any material debt covenants, including
that financial covenant included in your A/R securities program, please
disclose the required ratios as well as the actual ratios as of each reporting
date.  This will allow readers to
understand how much cushion there is between the required ratios and the actual
ratios.  See Section I.D and IV.C of
the SEC Interpretive Release No. 33-8350.  Further ensure that your disclosure, in
future filings, discusses the impact that failing covenants would have on your
operations and liquidity, specifically addressing the alternative sources of
liquidity if availability under the credit facility was reduced or limited as
we note that you depend on your credit facility to provide liquidity for
operations and working capital needs.

Response:

On
page 88 of the 2008 10-K, the company stated, “Our management believes
that we are in compliance with the covenants contained in the agreements
governing our debt instruments, including our Senior Credit Facilities, our A/R
Securitization Program and the indentures governing our notes.” The company
intended this language to constitute an affirmative statement

3

that
it was in compliance with the secured leverage ratio covenant, along with each
of its other debt covenants.  As of December 31,
2008, the company’s secured leverage ratio was 3.40 compared to the covenant
test ratio of 3.75.  The covenant ratios
under the company’s accounts receivable securitization program were 0.77
(compared to the covenant test ratio of 2.50) for the “average aged receivables
ratio,” 1.28 (compared to the covenant test ratio of 4.00) for the “average
dilution ratio” and 2.29 (compared to the covenant test ratio of 5.00) for the “average
delinquency ratio.”

As
noted in the comment above, in the Q1 2009 10-Q, the company disclosed that it
obtained a waiver from its senior secured credit facility lenders, which
amended the secured leverage ratio covenant to 5.00. In the Q1 2009 10-Q, the
company indicated that it “remained” in compliance with its debt covenants. To
reiterate the 2008 10-K and Q1 2009 10-Q disclosure, the company believes that
it has not failed any of its debt covenants, including the secured leverage
ratio covenant. The company’s purpose in obtaining the waiver was not to address
a failure to comply with the secured leverage covenant but to minimize any risk
that it might fail the secured leverage covenant in future periods.

On
June 22, 2009, the company reached an agreement with Credit Suisse and
Deutsche Bank to settle its claims and end its litigation with the banks in
Texas state court. The company filed a Current Report on Form 8-K on June 23,
2009 regarding the settlement. Under the terms of the settlement agreement, the
company received $620 million in cash.
This cash provides additional “cushion” towards the secured leverage
ratio covenant for future periods.
However, it is important to note that the secured leverage ratio
covenant only is applicable if the company has outstanding borrowings
(including letters of credit) under the revolving credit facility of the
company’s senior credit facilities. As of December 31, 2008, March 31,
2009 and today, the company has no outstanding borrowings under the revolving
credit facility and $31 million in letters of credit as of March 31, 2009.
The company believes that, if it were ever necessary, by simply collateralizing
the letters of credit with available cash, the financial covenant would be
eliminated.  The revolving credit  facility expires in 2010.  The company believes it has and will have
adequate cash to allow it to avoid borrowing on the revolving credit facility
in future periods.

Currently,
the company believes that the revolving credit facility is not a material
component of its liquidity, and, accordingly, the disclosure of the related
financial ratios is not meaningful.
Furthermore, given the “cushion” in the covenant ratios under the
company’s accounts receivable securitization program, disclosure of such ratios
is also not meaningful. Nevertheless, to the extent such disclosure is
meaningful or required in future filings, the company will provide enhanced
disclosure concerning applicable debt ratios consistent with
SEC Interpretive Release

4

No. 33-8350.
The company agrees that it will provide enhanced disclosure regarding the
impact that a failure to comply with applicable debt covenants would be
expected to have on its liquidity in future filings.

Short-Term
and Long-Term Liquidity, page 89

3.             In connection
with your December 14, 2008 Settlement Agreement, you agreed to pay Apollo
and certain of its affiliates an amount of cash equal to 20% of the value of
cash and non-cash consideration that is in excess of $500 million that you may
obtain or receive in settlement in connection with claims you made against the
lenders involved in the merger agreement.
You further state that in no circumstance will the aggregate payments
exceed $425 million.  Tell us and
disclose in future filings how you determine that the amount will not exceed
$425 million and how you considered disclosing this contingent liability in
MD&A.

Response:

The
company disclosed in a Current Report on Form 8-K filed December 15,
2008 and in the 2008 10-K that it entered into a letter agreement (the “Apollo
Letter Agreement”) dated December 14, 2008 with Apollo, Hexion and certain
of their related parties. The Apollo Letter Agreement was filed as Exhibit 10.2
to the company’s Current Report on Form 8-K filed on December 15,
2008. The Apollo Letter Agreement expressly provides that “in no circumstance
shall the aggregate amount of any payments owed by Huntsman to the Apollo
Parties under this letter exceed $425 million.” Accordingly, the company
disclosed this fact as is noted in your comment above.

Because
the Apollo Letter Agreement provides for a potential allocation of recovery
amounts in litigation by the company against Credit Suisse and Deutsche Bank
and does not otherwise require the company to pay any amounts, the company
treated the allocation arrangement as a contingent liability against a
contingent asset. The company believes that the disclosure of its obligations
under the Apollo Letter Agreement in the 2008 10-K is consistent with terms of
the Apollo Letter Agreement.

Please
also note that the Apollo Letter Agreement states that “in the event trial
commences in the Texas Action Against the Banks, any interest on the part of
the Apollo Parties shall terminate immediately, and Huntsman shall not owe any
portion of any subsequent recovery to the Apollo Parties under this letter.”
The company also disclosed this information in the 2008 10-K. The referenced
trial commenced on June 15, 2009. As noted in the response above, on June 22,
2009,

5

the
company reached a settlement with the banks, and, pursuant to the express terms
of the Apollo Letter Agreement, neither Apollo, Hexion nor any of their related
parties is entitled to any portion of the settlement proceeds. The company will
provide disclosure regarding the termination of its obligations under the
Apollo Letter Agreement in one or more future filings.

Critical
Accounting Policies, page 92

3.                                       Considering the
material nature of your inventory balance and your most recent $34 million
write down to inventory during the fourth quarter 2008, please expand your
critical accounting policies to include an inventory policy that discusses the
nature of your inventory and your valuation process.  Please disclose the nature of the inventory
that was written down in the fourth quarter.
Quantify the amount of inventory that remains for the inventory items
that have reserves allocated to them and discuss the facts and circumstances
surrounding management’s determination of the amount of write downs recorded
each period.  Please provide a robust
discussion of your inventory valuation methods and underlying assumptions.  Additionally, tell us what consideration was
given to disclosing your inventory account activity in your Schedule II, as
required in Rule 12-09 of Regulation S-X.

Response:

In
future filings, the company will revise its critical accounting policies in
accordance with this comment to include disclosures similar to the following:

Inventory

Inventories are stated at the lower of cost or market, with cost
determined using last-in first-out, first-in first-out, and average cost
methods for different components of inventory.
Market is determined based on net realizable value for finished goods
inventories and replacement cost for raw materials and work-in-process
inventories.  In periods of declines in
the selling prices of our finished products, inventory carrying values may
exceed the net realizable value upon sale, resulting in a lower of cost or market
charge. We evaluate the need for a lower of cost or market adjustment to
inventories based on the period-end selling prices of our finished products.

As a result of the
recent decline in selling prices, we recognized a charge of $34 million in the
fourth quarter of 2008 to write our inventories down to the lower of cost or
market values.  This lower of cost or
market adjustment was recorded primarily on finished goods inventories, as well
as some of the raw materials inventories expected to be used in the production
of such finished goods inventories. The charge resulted primarily from declines
in MDI selling prices in Asia, as well as sharp declines in raw materials
prices for benzene prior to period end.
The write-down represented

6

an approximately 6% and
34% decrease to our total MDI and benzene inventories, respectively, and our
MDI and benzene inventories represented 15% and 2% of our total consolidated
inventories, respectively.

The
company considered the need to disclose the inventory write-down noted above in
Schedule II, but it believed that the write-down in the carrying amount of the
inventories from cost to market created a new “cost basis” for the related
inventories, consistent with guidance provide in SEC Topic 5.BB, rather than a
reserve account that would be required to be disclosed in accordance with Rule 12-09
of Regulation S-X.

4.                                       Considering the
decline in your stock price and the impact of recent economic events, please
expand, in future fi