June 25, 2008

Foundation's Value Falls Sharply

The value of the Huntsman Foundation fell sharply last week, after an expected buyer for the Huntsman Corporation — whose stock is a major financial base of the foundation — said it might not be able to complete the deal.

Last year, Jon M. Huntsman Sr. and his wife, Karen, gave $700-million to their foundation, including 21.7 million shares of stock in Huntsman Corporation, a chemicals company that he has assembled over more than three decades. That gift put the couple at No. 2 on The Chronicle’s annual list of America’s top donors.

The foundation’s Huntsman stock would have been worth more than $600-million if the expected buyout of the company had closed on schedule. But last week the acquiring company, Hexion Specialty Chemicals, sued Huntsman Corporation, saying the transaction was no longer viable, given the recent decline in Huntsman’s financial performance.

Huntsman shares fell to about $13 per share after that news was released, less than half the expected buyout price of $28 per share.

The difference between the two prices means a loss of more than $300-million for the foundation. The Huntsman Foundation, based in Salt Lake City, was considered by philanthropy experts to be the largest foundation in town following Mr. Huntsman’s gift last year, but it probably has lost that title with the fall in Huntsman Corporation stock.

“The corporate stock which we donated to our charitable foundation a little over a year ago will remain in that foundation,” Mr. Huntsman said, in a statement. “We don’t measure the value of the donated shares from one day to the next and we are confident that the foundation will be just fine.”

On Monday, the Huntsman Corporation sued Hexion’s parent, Apollo Management, for damages exceeding $3-billion. Mr. Huntsman, who is chairman of the board of the company that he founded, said in a statement that he was “outraged” by Apollo’s actions. “We will do everything in our power to hold Apollo and its founders accountable for the multi-billion dollar harm their actions have caused our company,” he said.

The decline in the stock could be a huge blow to cancer research and charities in Utah. The Huntsman Foundation’s bylaws state that 80 percent of grant making stay within the state of Utah, and that at least half of the in-state spending support cancer research or treatment.

The infusion of funds from Mr. Huntsman last year led to a big increase in requests for grants from Utah charities. Janet Bingham, who provides day-to-day leadership of the foundation (Mr. Huntsman’s son David has the title of president), said that the foundation had been counting on liquidating its stake in the company at the time of the merger, and that as a result it would delay making decisions on new grant applications.

“We’ll now have to go back and rethink all of our plans,” she said.

Ms. Bingham said Mr. Huntsman would stand by pledges he has already made. “Mr. Huntsman will always meet the obligations that he already has out there, one way or another,” she said.

She said she remained confident that the stock would eventually rise again, whether the merger is completed or not.

“This is a long ways from being over,” she said. “The foundation is not going to sell its stock until it is the right time to do so.”

She declined to provide the current value of the foundation, but the Huntsman Corporation shares account for the vast majority of its assets. In December 2006 — before the large 2007 gift — the foundation had assets of just $1.5-million, according to tax records.

Ms. Bingham also heads the Huntsman Cancer Foundation, which raises money for the Huntsman Cancer Institute at the University of Utah. Mr. Huntsman has given $225-million to the cancer institute over the years, but the cancer foundation currently holds just 450,000 shares of Huntsman Corporation stock, Ms. Bingham said.

Mr. Huntsman said in an interview late last year with The Chronicle that he and his wife had given more than $1.2-billion over the past decade. During that interview, Mr. Huntsman said they intended to give even more money to the foundation — perhaps another $600-million or so — over the next five to 10 years.

Mr. Huntsman has grown accustomed to a roller-coaster ride in his three decades with the Huntsman Corporation, and it is too early to say whether this latest setback will alter his philanthropic goals.

“We’ve been on the cliff of trouble three or four times,” Mr. Huntsman said during the interview last year, “and I’ve been able to work through them all.”