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

9 Months Ended

Sep. 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, comprised of 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 received proceeds of $1.92 billion and recognized a net after-tax gain of $748 million in the first nine months of 2020. Additionally, in connection with this sale, we entered into long-term supply agreements with Indorama for certain raw materials at market prices supplied by our former Chemical Intermediates Businesses.

During the first nine months of 2020, we paid $188 million of income taxes with respect to the gain on the sale of our Chemical Intermediates Businesses. If the sale of approximately 42.5 million ordinary shares we hold in Venator to SK Capital Partners, LP is completed on or before December 31, 2020, we anticipate to offset an expected capital loss on the sale of the Venator shares against the capital gain realized on the sale of our Chemical Intermediates Businesses, and, accordingly, we expect to pay additional income taxes of approximately $37 million during the fourth quarter of 2020 in connection with the sale of our Chemical Intermediates Businesses. If the sale of these Venator shares does not close on or before December 31, 2020, then we expect to pay additional income taxes of approximately $187 million during the fourth quarter of 2020 in connection with the sale of our Chemical Intermediates Businesses and would realize the benefit of approximately $150 million related to the capital loss on the sale of Venator shares in late 2021 or early 2022. For more information on the sale of ordinary shares we hold in Venator to SK Capital Partners, LP, see “Note 1. Recent Developments – Sale of Venator Interest.”

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 were 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				Nine months
	ended				ended
	September 30,				September 30,
	2020		2019		2020		2019
Major line items constituting pretax income of discontinued operations(1):
Trade sales, services and fees, net(2)	$	—	$	400	$	7	$	1,183
Cost of goods sold(2)		—		292		11		976
Gain on sale of the Chemical Intermediates Businesses		—		—		978		—
Insurance proceeds		—		—		48		—
Other expense items, net		—		15		1		37
Income from discontinued operations before income taxes		—		93		1,021		170
Income tax expense		—		(25)		(239)		(44)
Net income attributable to discontinued operations	$	—	$	68	$	782	$	126

(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 and conducted an initial public offering of ordinary shares of Venator. 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 September 30, 2020 and 2019, we recorded a gain of $6 million and a loss of $148 million, respectively, and for the nine months ended September 30, 2020 and 2019, we recorded a loss of $100 million and $91 million, respectively. These gains and losses were recorded in “Fair value adjustments to Venator investment” on our condensed consolidated statements of operations.

In August 2020, we entered into a definitive agreement to sell approximately 42.5 million of ordinary shares we hold in Venator, including a 30-month option for the sale of the remaining approximate 9.5 million ordinary shares we hold in Venator at $2.15 per share. See “Note 1. General—Recent Developments—Sale of Venator Interest.”

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


	Three months				Nine months
	ended				ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenues	$	474	$	526	$	1,462	$	1,666
Gross profit		20		62		126		205
(Loss) income from continuing operations		(39)		(17)		(48)		3
Net (loss) income		(39)		(17)		(48)		3
Net loss attributable to Venator		(42)		(18)		(54)		(1)