Quarterly report pursuant to Section 13 or 15(d)

DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS

v3.19.3
DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS
9 Months Ended
Sep. 30, 2019
DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS  
DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS

4. DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS

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Sale of Chemical Intermediates Businesses

On August 7, 2019 we entered into an agreement with Indorama to sell our Chemical Intermediates Businesses for a purchase price of $2.0 billion in cash plus up to approximately $76 million in net underfunded pension and other post-employment benefit liabilities. The purchase price is subject to certain closing and post-closing working capital and net indebtedness adjustments. We expect this transaction to close in early 2020. Beginning in the third quarter of 2019, we reported the Chemical Intermediates Businesses as held for sale and reported its results of operations as discontinued operations. Additionally, certain amounts for prior periods have been recasted for all periods presented.

The following table reconciles the carrying amounts of major classes of assets and liabilities of discontinued operations to total assets and liabilities of discontinued operations that are classified as held for sale in our condensed consolidated balance sheets (dollars in millions):

​

​

​

​

​

​

​

​

​

​

September 30, 

​

December 31, 

​

​

2019

    

2018

Carrying amounts of major classes of assets held for sale:

​

​

​

​

​

​

Accounts receivable

​

$

73

​

$

89

Inventories

​

​

107

​

​

134

Other current assets

​

​

1

​

​

9

Total current assets

​

​

​

​

​

232

Property, plant and equipment, net

​

​

690

​

​

711

Operating lease right-of-use assets

​

​

76

​

​

—

Other noncurrent assets

​

​

161

​

​

166

Total noncurrent assets

​

​

​

​

​

877

Total assets held for sale(1)

​

$

1,108

​

$

1,109

Carrying amounts of major classes of liabilities held for sale:

​

​

​

​

​

​

Accounts payable

​

$

142

​

$

168

Accrued liabilities

​

​

47

​

​

57

Current operating lease liabilities

​

​

21

​

​

—

Total current liabilities

​

​

​

​

​

225

Deferred income taxes

​

​

171

​

​

159

Noncurrent operating lease liabilities

​

​

57

​

​

—

Other noncurrent liabilities

​

​

148

​

​

124

Total noncurrent liabilities

​

​

​

​

​

283

Total liabilities held for sale(1)

​

$

586

​

$

508

(1) The assets and liabilities held for sale are classified as current as of September 30, 2019 because it is probable that the sale of our Chemical Intermediates Businesses will close within a year.

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The following table reconciles major line items constituting pretax income of discontinued operations to after-tax income (loss) of discontinued operations as presented in our condensed consolidated statements of operations (dollars in millions):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months

​

Nine months

​

​

ended

    

ended

​

​

September 30, 

​

September 30, 

​

​

2019

​

2018

​

2019

​

2018

Major line items constituting pretax income of discontinued operations(1):

​

​

​

​

​

​

​

​

​

​

​

​

Trade sales, services and fees, net(2)

​

$

400

​

$

1,015

​

$

1,183

​

$

3,156

Cost of goods sold(2)

​

​

292

​

​

857

​

​

976

​

​

2,185

Other expense items, net that are not major

​

​

15

​

​

134

​

​

37

​

​

269

Income from discontinued operations before income taxes

​

​

93

​

​

24

​

​

170

​

​

702

Income tax (expense) benefit

​

​

(25)

​

​

41

​

​

(44)

​

​

(95)

Valuation allowance

​

​

—

​

​

(270)

​

​

—

​

​

(270)

Income (loss) from discontinued operations, net of tax

​

​

68

​

​

(205)

​

​

126

​

​

337

Net income attributable to noncontrolling interests

​

​

—

​

​

(2)

​

​

—

​

​

(6)

Net income (loss) attributable to discontinued operations

​

$

68

​

$

(207)

​

$

126

​

$

331

(1) Discontinued operations include our Chemical Intermediates Businesses, our Australian styrenics operations and our North American polymers and base chemicals operations for all periods presented. In addition, the three and nine months ended September 30, 2018 also include the results of Venator. Beginning in the fourth quarter of 2018, Venator was no longer accounted for as discontinued operations.

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(2) Includes eliminations of trade sales, services and fees, net and cost of sales between continuing operations and discontinued operations.

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Separation and Deconsolidation of Venator

In August 2017, we separated the P&A Business and conducted an IPO of ordinary shares of Venator, formerly a wholly-owned subsidiary of Huntsman. Additionally, in December 2017, we conducted a secondary offering of Venator ordinary shares. All of such ordinary shares were sold by Huntsman, and Venator did not receive any proceeds from the offerings.

​

On January 3, 2018, the underwriters purchased an additional 1,948,955 Venator ordinary shares pursuant to their over-allotment option, which reduced Huntsman’s ownership interest in Venator to approximately 53%. Beginning in the third quarter of 2017, we reported the results of operations of Venator as discontinued operations.

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On December 3, 2018, we sold an aggregate of 4,334,389, or 4%, of Venator ordinary shares to Bank of America N.A. at a price determined based on the average of the daily volume weighted average price of Venator ordinary shares over an agreed period (the “Forward Swap”). Over this agreed period, we received aggregate proceeds of $19 million, $16 million of which was received in the first quarter of 2019. Following this transaction, we retained approximately 49% ownership in Venator and this transaction allowed us to deconsolidate Venator beginning in December 2018, and thus we began accounting for our remaining interest in Venator as an equity method investment and elected the fair value option to account for our equity method investment in Venator.

​

Although we intend to monetize our remaining 49% ownership in Venator, our ability to sell our ordinary shares of Venator at a reasonable price is dependent upon the prevailing market value of Venator common stock. The depressed Venator stock price inhibits our ability to sell our remaining shares of Venator at a reasonable price, which could continue for more than twelve months. Therefore, in December 2018, our equity method investment in Venator did not meet the held for sale criteria and our equity method investment in Venator was recorded in continuing operations.

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During the first quarter of 2019, we recorded a gain of $1 million to record the Forward Swap at fair value. Additionally, for the three and nine months ended September 30, 2019, we recorded a loss of $148 million and $91 million, respectively, to record our investment in Venator at fair value. These gains and losses were recorded in “Fair value adjustments to Venator investment” on our condensed consolidated statements of operations.