Huntsman to cut more than 1,100 jobs

NEW YORK (Reuters) - U.S. chemical maker Huntsman Corp said on Thursday it plans to cut about 1,175 jobs, or about 9 percent of its workforce, by year-end to reduce costs and tackle the huge slump in chemical demand.

Huntsman, which recently terminated its $6.5 billion agreement to be acquired by Apollo's Hexion Specialty Chemicals, also said it plans to shut down its titanium dioxide plant located in Grimsby, in the United Kingdom.

In addition to trimming its own workforce, Huntsman is also laying off about 490 contractors -- a substantial percentage of its contractor workforce, a spokesman for the company told Reuters.

The Woodlands, Texas-based company expects to generate about $150 million in annualized operating cost savings from its actions.

The company will book cash and noncash charges totaling about $60 million due to the restructuring actions, Chief Executive Officer Peter Huntsman told Reuters, in a telephone interview.

Huntsman expects 2009 capital expenditures of $230 million -- a reduction of $190 million from the $420 million spent on capital projects during 2008.

"This restructuring will allow us to improve our business where we most acutely feel the effects of the present global economic slowdown, mainly in our pigments and textile divisions," said Huntsman.

The lower capital spending, coupled with the cost-cutting initiatives, will lower the company's 2009 costs by about $340 million.

Huntsman said a lot of the slump in demand seen in the fourth quarter was due to destocking of higher-priced, older inventory within the sector.

"We are seeing demand picking up from where it was at the worst of the fourth quarter, but we are still seeing a fall-off in demand from a year ago," said Huntsman.

"We will see a greater increase in demand after the Chinese New Year, as many of the projects in China have been put on hold right now," said Huntsman.

Huntsman has just collected $1 billion from private equity firm Apollo Management and its affiliates, as part of a settlement in return for terminating the merger agreement.

"At a time when many chemical companies are wondering how they are going to survive the year, we are uniquely positioned to take advantage of these market conditions," said Huntsman.

Huntsman said all its upcoming debt maturities will be addressed with the money from the settlement with Apollo.

Shares of Huntsman were down 13 cents or 4.3 percent at $2.91 in afternoon trade on the New York Stock Exchange.

(Reporting by Euan Rocha; Editing by Derek Caney and Gerald E. McCormick)