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

Quarterly report pursuant to Section 13 or 15(d)

Note 4 - Discontinued Operations and Business Dispositions

Note 4 - Discontinued Operations and Business Dispositions

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

4. DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS 

SaLE of tEXTILE eFFECTS bUSINESS

On August 9, 2022, we entered into a definitive agreement to sell our Textile Effects Business to Archroma for a total enterprise value of $718 million, which includes the assumption of approximately $125 million in net underfunded pension liabilities as of December 31, 2021. We anticipate the transaction will close no later than the first half of 2023. Beginning in the third quarter of 2022, the results of our Textile Effects Business are reported as discontinued operations 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,*
	*2022*		*2021*
Carrying amounts of major classes of assets held for sale:
Accounts receivable	$	138	$	171
Inventories		173		163
Other current assets		12		12
Total current assets				346
Property, plant and equipment, net		120		133
Deferred income taxes		20		26
Operating lease right-of-use assets		16		22
Other noncurrent assets		4		1
Total noncurrent assets				182
Total assets held for sale(1)	$	483	$	528
Carrying amounts of major classes of liabilities held for sale:
Accounts payable	$	75	$	94
Accrued liabilities		43		67
Current operating lease liabilities		2		2
Total current liabilities				163
Noncurrent operating lease liabilities		17		24
Other noncurrent liabilities		105		127
Total noncurrent liabilities				151
Total liabilities held for sale(1)	$	242	$	314

(1)	Total assets and liabilities held for sale as of September 30, 2022 are classified as current because it is probable that the sale of our Textile Effects Business will close within a year.

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

	*Three months*						*Nine months*
	*ended*						*ended*
	*September 30,*						*September 30,*
	*2022*			*2021*			*2022*			*2021*
Major line items constituting pretax income of discontinued operations:
Trade sales, services and fees, net	$	158		$	188		$	547		$	588
Cost of goods sold		127			142			420			443
Other expense items, net		25			31			83			91
Income from discontinued operations before income taxes		6			15			44			54
Income tax expense		(7	)		(9	)		(14	)		(18	)
Net (loss) income attributable to discontinued operations	$	(1	)	$	6		$	30		$	36

SALE OF INDIA-BASED DO-IT-YOURSELF CONSUMER ADHESIVES BUSINESS

On November 3, 2020, we completed the sale of the India-based DIY business to Pidilite Industries Ltd. and received cash of approximately $257 million. In the second quarter of 2021, we received the full payment of $28 million pursuant to an earnout provision based on the DIY business’s achievement of certain sales revenue targets in line with its 2019 performance. As a result, we recognized an additional pretax gain of $28 million in the second quarter of 2021, which was recorded in gain on sale of India-based DIY business in our condensed consolidated statements of operations.

SaLE of Venator InterEST

On December 23, 2020, we completed the sale of approximately 42.4 million ordinary shares of Venator Materials PLC (“Venator”). Concurrent with the sale of ordinary shares, we entered into an option agreement, pursuant to which we granted an option to funds advised by SK Capital Partners, LP to purchase the remaining approximate 9.7 million ordinary shares we hold in Venator at $2.15 per share. The option will expire on June 23, 2023 and will not be exercisable so long as such exercise would result in a default or an “Event of Default” under Venator’s Term Loan Credit Agreement and Revolving Credit Agreement. We record this option at fair value with changes in fair value reported in earnings. We account for our remaining ownership interest in Venator as an investment in equity securities that are marked to fair value with changes in fair value reported in earnings. For the three months ended September 30, 2022 and 2021, we recorded net losses of $7 million and $3 million, respectively, and for the nine months ended September 30, 2022 and 2021, we recorded net losses of $9 million and $28 million, respectively, to record our investment in Venator and related option at fair value. These net losses were recorded in “Fair value adjustments to Venator investment, net” in our condensed consolidated statements of operations.