Huntsman Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS

DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS

6 Months Ended

Jun. 30, 2020

DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS

DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS

4. DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS

Sale of Chemical Intermediates Businesses

On January 3, 2020, we completed the sale of our Chemical Intermediates Businesses to Indorama Ventures Holdings L.P. (“Indorama”) in a transaction valued at approximately $2 billion, comprising a cash purchase price of approximately $1.92 billion and the transfer of approximately $72 million in net underfunded pension and other post-employment benefit liabilities.

In connection with this sale, we recognized a net after-tax gain of $748 million in the first six months of 2020. During the first quarter of 2020, we received proceeds from the sale of $1.915 billion and received an additional $8 million in July 2020 related to this sale. With respect to the gain on this sale, during the first six months of 2020, we paid $10 million of income taxes, and we expect to pay additional income taxes of approximately $365 million during the second half of 2020. Certain amounts for prior periods have similarly been retrospectively reflected for all periods presented. In connection with this sale, we entered into long-term supply agreements with Indorama for certain raw materials at market prices supplied by the Chemical Intermediates Businesses

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):


	December 31,
	2019
Carrying amounts of major classes of assets held for sale:
Accounts receivable	$	145
Inventories		105
Total current assets
Property, plant and equipment, net		720
Operating lease right-of-use assets		69
Deferred income taxes		4
Other noncurrent assets		165
Total assets held for sale(1)	$	1,208
Carrying amounts of major classes of liabilities held for sale:
Accounts payable	$	152
Accrued liabilities		26
Current operating lease liabilities		20
Total current liabilities
Deferred income taxes		135
Noncurrent operating lease liabilities		51
Other noncurrent liabilities		128
Total noncurrent liabilities
Total liabilities held for sale(1)	$	512

(1)	The assets and liabilities held for sale are classified as current as of December 31, 2019 because the sale of our Chemical Intermediates Businesses was completed on January 3, 2020.

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


	Three months				Six months
	ended				ended
	June 30,				June 30,
	2020		2019		2020		2019
Major line items constituting pretax income of discontinued operations:
Trade sales, services and fees, net	$	1	$	432	$	7	$	835
Cost of goods sold		2		372		11		736
(Loss) gain on sale of the Chemical Intermediates Businesses		(12)		—		978		—
Insurance proceeds		20		—		48		—
Other expense items, net		1		11		1		22
Income from discontinued operations before income taxes		6		49		1,021		77
Income tax expense		(1)		(14)		(239)		(19)
Net income attributable to discontinued operations	$	5	$	35	$	782	$	58

(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.

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

Separation and Deconsolidation of Venator

In August 2017, we separated our Titanium Dioxide and Performance Additives business (the “P&A Business”) and conducted an initial public offering of ordinary shares of Venator Materials PLC (“Venator”), formerly a wholly-owned subsidiary of Huntsman. Following a series of public offerings and sales of Venator ordinary shares, beginning in December 2018, our ownership in Venator decreased to approximately 49%, and we began accounting for our remaining interest in Venator as an equity method investment using the fair value option. For the three months ended June 30, 2020 and 2019, we recorded gains (losses) of $4 million and $(18) million, respectively, and for the six months ended June 30, 2020 and 2019, we recorded (losses) gains of $(106) million and $58 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.

Summarized financial information of Venator for the three and six months ended June 30, 2020 and 2019 is as follows (in millions):


	Three months				Six months
	ended				ended
	June 30,				June 30,
	2020		2019		2020		2019
Revenues	$	456	$	578	$	988	$	1,140
Gross profit		45		67		106		143
(Loss) income from continuing operations		(16)		22		(9)		20
Net (loss) income		(16)		22		(9)		20
Net (loss) income attributable to Venator		(19)		21		(12)		18