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Show E6 The Salt Lake Tribune BUSINESS Sunday, August 6, 2000 TheLife of a Man and His Company J ean CANCER INSTIT poe 1995 Pledges 2000 ‘$100 million to treymisson'or 4qqo egg carton. ee Elected LDS Church president and wins . Idaho. insti with initial pledge of $10 million. 1950 Family to Keyes Fiber Co. in 1959 Maries doctorate in educationUniversity, at Stanford Student president of high school class. a stock deal valued at $8 million; agrees to be chief executive dusiness that. aged Huntsman, not surprisingly, hadnointention of staying longer On Philanthropy than his commitment. “] learned from that experience and manyother experiences since @ Continued from E-1 then that I would do it alone,” Huntsman’selegantoffice in the headquarters building that hugs Huntsman says, “You don’t make success and progress in life when you haveto wait for others to give the foothills just south of Red Butte Canyonis very muchtherefugeof. a wealthy business executive.it is filled with family pictures and Western artwork, including a Remington statue covered with Beanie Babies. Huntsman travels by corporate jet. He owns a huge home in DeerValley and a fishing lodge in Alaska. Little in Huntsman’s life sug- gests just how close he came to failure. But Huntsmanhas beentested. Taking Chances: The Black- foot, Idaho, native began his career in the egg business. After graduating from the WhartonSchoolofFi- nance at the University of Pennsylvania and serving in the Navy, Huntsman went to work for his wife’s uncles in Los Angeles at Olsen Egg Co. The career move stunned his Wharton classmates. Huntsman wonthe school’s award forits top graduate; the next logical step was a lucrative job on Wall Street. But the decision proved fortuitous. Olsen Egg was working on a plastic egg carton to replace paper cartons. The businesslater merged with Dow Chemical Co.’s packag- ing business and in 1967, at the age of 30, Huntsman was asked to run the money-losing company. Within 18 months,he turned the business around. He also got his first lessons in plastics and their potential. Within another 18 months, Huntsman, still in his early 30s, struck out on his own. In 1970, Huntsman persuaded his brother Blaine, a finance professorat the University of Utah, to you approval.” Shrewd Acquisitions: Huntsman Corp. was born in 1983 after Hiuitsman completed a three-year assignmentas a mission president for the LDS Church. The shrewd way he maneuvered his acquisition of a Shell Chemical Co. polystyreneplant in Belpre, Ohio, that year foreshadowed how he would amass a fortune estimated at $4 billion. The projections soon proved inaccurate, their timing Crisis and Struggle: In the company’sfirst full year of operations, it lost about half its net worth. The company posted a smaller loss the next year but struggled to payits bills. Then the energy crisis hit. Overnight, the companycould not get raw materials forits two plants. “Jon and I were personally bor- rowed to the hilt,” Blaine Hunts- mansays. “And when the energy is ; came, it just looked liked The company’s net worth eventually fell to as low as $10,000; Jon Huntsman borrowed moneyat 1 percent a week to makepayroll. He remembers pleading with the company’s board at one point not to file for bankruptcy. “I was literally crying,”he says. It was a time ofeconomic chaos. The company’s plants were operating atlittle more than 50 percent capacity. Desperate to get polysty- rene, Jon and Blaine Huntsman started trading commodities,often starting with heating oil or propane and working from there, After six frantic months,theyfigured out how to get chemicals for their plants, They also were making more money on trading than pro- ducingplastic containers, By 1976, they had built a successful business, but one with limited capital. The stockholders decided to se}l the company to Keyes Fiber Corp. for $8 million. Jon Huntsman owned about 25 percent elite. Jon Huntsman never applied again, although the club has made apparent overtures by inviting several ofhis sons to join. They've declined. Andasbefits someone who once was an outsider, Huntsman still visible example of Huntsman’s generosity. Huntsman once took a child with leukemia and her family to Disneyworld on his private jet. AndRichard Durham,a son-in-law who grew up near the Huntsman family, remembers when Huntsman got people in the neighbor- hood to buy a van with lift for his father, who had multiple sclerosis. Huntsman says. The task is complicated by the “I would characterize him as being a very opportunistic busi- nessman,” says Tom Cole of Deutsche Bank Alex Brown,a unit of Huntsman knowsthepressures Steve Griffin/The Salt Lake Tribune Aworkerfor the Huntsman Corp.atthe Jefferson County, Texas,facility bikes underneath somepiping. Workers use bicyclesto travelfrom place to place within the petrochemical processingplant. you’d thank him.” Huntsman hedges manyof his bets by taking on partners. And he Making Rust Work: When Huntsman bought an antiquated Shell plant in northern England, he was quoted as saying, “We can makerust wor! The London Timescited itas one of 10 memorable quotes ofthe year. And Huntsman's ability to “make rust work” is why the Huntsman Corp. now employs more than 14,000. He repeatedly has found ways to run plants better than their previous owners. “Timing makes the initial money,” says Nathan Hubbard, Huntsmanvice presidentof petrochemicals for North America. “But you will go brokeif all you makeis the initial money.” Huntsman knows that once he buys a company, the A ‘ a silver spoon.” They also grew upin the business, Starting in junior high, and sometimes earlier, Huntsman | would take twoorthree ofhis children on businesstrips. Family va- The company, Huntsmansays, cations doubled as shareholders’ meetings. In the 1980s, when Huntsman Corp. was a small company, the children simply found a place that suited their interests and talents. Durham was interested in finance, Peter Huntsman has neverlost money onanyofits 33 acquisitions — deals that have appease Wall Street. It can wait out the downturnsinits industry. Stavropoulos says. cized, because they were born with Huntsman dealssince 1988. And buying righthelps. company, planned to close. Once again, he did it with no money down, persuading Hoechst to accept a $45 million paymentin five ‘This is a fluke, this is a onetime deal’ you heard all that,” plish, they are going to be criti- the debt evenif prices for a particular petrochemical don’t improve, says Cole, who has worked on accelerated as the company has grown. The companyhasthe advantage of being private, unburdened by the pressure to post consistently higher earnings each quarter to in operations, Jon Huntsman Jr., sales and international operations. He gave$1 million to build the YWCA’s women’s shelter and $1 million to the homeless shelter. He gave $5.5 million to the J. Reuben Clark Law: School at Br! Young University, Each year, he gives $10,000 to 10 outstanding public school teachers, administrators and volunteers. Halfof his charitable contributions take place in Utah. And most are not public, “T’ve always said the best way to give is to s! check under the door and run,” Huntsman says. U, of U. basketball coach Rick Majerus, a friend of Huntsman's, recalls once watching Huntsman discreetly trying to tip a waitress during a 14-course business dinner in Indonesia. “He didn't want to embarrass the hosts,” Majerus says, In Salt Lake City, Huntsman There also was no guarantee there would bea a business to take over some “They were tite‘and death bets in the 80s,” says Jon Huntsman Jr., the company’s vice chairman. ‘Those dayshave passed, and the transition to the next generation is well under way. That was shown with Peter Huntsman’s promotion this summer. Peter started at the bottom, leaving college to drive a delivery truck. He since has done his homework, reading chemistry books and becoming a student of the industry. He knows he can never be Jon Huntsman. “Myfather is almost a mythical being in this industry,” he says, “You don't meet Mr. Dow.” Theyare different people, with different strengths. And he knows heis chiefexecutive partly because of his family. “I'm not under any false illusions,” Peter Huntsman says, “I don't think there are manycollege drop-outs whoare in the position I have.” He also knows the pressure he will face to continue the company’s growth. His father says his “biggest single concern and worry”is complacency. He has told the next generation that when Huntsman Corp.is no longer a well-run company,it is time to sell, “We need toget out,” Huntsman can be more overt. Majerus says he says. “Our time is done.” In contrast, most public compa- nies sell whenbusinessis awful. To Huntsman,thatis the time to buy. Huntsman refers to the “shopping-for-a-Christmas-tree theory” of acquisitions. “T never buy a Christmas tree unlessI can negotiate a guy down,” he says. “And on the 24th of December,you've got all the aces.” Companies trying to unload un- derperforming or money-losing businesses are the equivalent of the tree lot on Christmas Eve. “When you see someof these companies that are down and out, and know the management made a decision to sell, you can buy them for a third of their value,” Huntsman says. His reputation as a shrewd negotiator has become a bit of a handicap. The chief executive of one company,for instance, refused to even talk to him. “Hesaid,‘Jon, every deal you've Don Sanches,an assistant operator, monitors production in a control room at the Huntsman Corp.Jefferson County, Texasfacility. can rattle the city’s leaders, He can be remarkablyfrank ina business community where candoris rare and healsois a bit of a maverick. In 1988, he considered running against Gov. Norm Bangerter in the Republican gubernatorial primary, upsetting party loyalists. And he was one ofthe few promi- nent business leaders to question Salt Lake City's fevered pursuit of the 2002 Olympics. Huntsman challenged the budgetprojections, warning they were low. He was right. “But nobody cared they all wanted it so badly,” says Karen Huntsman, his wife, somebody,’” Huntsman recalls. Healso can show his anger, as “It's turned from a major advan- he did when the University of Utah tage to a huge disadvantage.” student newspaper attacked Cole acknowledges that. Karen's appointment to the “People are worried that when .. School's boardof trustees because they are selling a business to him, * shelacks a college degree. it will be perceived that they sold it The paper's editorials and at the wrong time and wrong Huntsman’s ire — panicked the price,” he says. university's administration. And it iseasy to see why. The school has Once an Outsider: In a sense, nogreater benefactor, Huntsmanis as close as one gets to Since 1993, Huntsman has done, you've taken the pants off his children and sons-in-law face. “The positive side is they were b born with a silver spoon and the opportunity to jump ahead of the 0 pack,let’s be honest,” Huntsman 4 says. “The negativesideis that al- 2 most no matter what they accom- structures deals so he can pay off “Tt was life or death,” Huntsman says. Yet he used the downturn to makeanotherbet, offering to buy two polystyrene plants that Hoechst A.G., a German chemical petrochemical companies, Huntsman owned 61 percent of the company he formed in 1992 to buy Goodyear Tire and Rubber Co.'s film and flexible packaging business. The balance was owned by Durham andhis wife, Christe- | na, with a few key executives owning small stakes. Excluding debt, Huntsman will | clear about $350 million before i sheer numberof children and inlaws. They’ have different strengths and different interests. Further, Huntsman Corp. is a multinational company with hundreds of executives who are not family members. They must have confidence in the next generation. thing, he has demonstrated a genius for timing the cycles of the notoriously cyclical petrochemicals industry. los, president andchief executive of Dow Chemical Co. in Midland, Mich. “And Jon saw an opportunity that nobodyelse saw.” Still, no one expected him to build one of the world’s largest | his interest in Huntsman Packaging Co. for $1.1 billion to Chase Capital Partners, an investment partnership run by Chase Manhattan Corp., and to Durham, the son-in-law who ran the company. business for the next generation, hoping to escape the potential con- plants at fire-sale prices, making dumps,” says William Stavropou- Partly to fund his philanthropy, Huntsman earlier this year sold flicts that arise amongsiblings and , ‘ inlaws. f “You kind of walk a very fine line between the role of a father and the role of a chairman,” world’s largest companies.If any- years. Almost immediately after the deal closed, prices recovered. “The industry was downin the Majerusisn’t buying tonight.’ ” The Next Generation: That | 4 Durham was given his own com- )’’ pany to run partly shows how Huntsman is preparing the family | coming two decades. Timeafter time, he has bought solid start. Two years later, however, prices for polystyrene collapsed. The companywasin violation of its loan agreements and struggling. Majerussays, “I can just see the help shuddering, ‘Christ, I hope lutely as fine a CEO asI’ve eve good on thecastoffs of some of the Huntsman Chemical Corp., as the company was known,was off to a Mike Miller/TheSalt Lake Tribune himself tips up to 25 percent, but Huntsman sometimeswill tip up to —_100 percent. When they goto a restaurant, seen in mylife.” It was the first of several bets Huntsman. would make in the learning what he could do to win NTSMAN ILS The company, which had sales |)ae of about $800 million, was built largely by Durham — whom\: Huntsman describes as “abso-j gave him a “Riverboat Gambler” Deutsche Bank. “His timing was alwaysvery, very good.” Immediately after buying Peter Huntsman pow ant eee Coe taxes. statue with the inscription, “From yourfriendsat Shell.” months, he increased the plant’s production from 60 percent of capacity to nearly 100 percent. wildly Huntsman was far removed from Salt Lake City’s establishment. In the 1970s, he and Blaine Huntsman were denied membership in the Alta Club,the exclusive gathering place of Salt Lake City’s business next generation say the center somedaywill be self-supporting. The institute is just the most sentially buying the plant with no money down. At the closing, Shell executives more of their business. Within horrific. workers that Huntsman Corp. was much differentfrom Texaco. “Let me tell you something about him from my view: He has unbelievable charm and charisma,” Hubbard says. “He can talk people,including bankers, including employees, into doing things they won’t do for other people. “It’s like nothing you've ever seen. This guy could fire you and Early in his career, however, $42 million. The price was a bargain, but still a lot more money They formed the company re- ber going over five-year projections of costs and sales on green ledger sheets taped together. The regular visits by the company’s top executive madeclear to ¥ Utah royalty. In addition to his, pledged more than $225 million to roles as industrialist and philan--. the Huntsman CancerInstituteon thropist, he is an LDS Church * campus.Opened last fal, it has a leader, holdingthe role of area au- $24 million budget and employs thority with oversight for numer- am including about 100 scientists physicians. ous LDS stakes. He is the son-in©A large portion of Huntsman’s law of David Haight, a church estate will go to the foundationthat apostle. His son, Peter, is married nds the center. The exact amount to the daughterof Russell Ballard, is not known, but members of the anotherapostle. than hehad. He pieced together a deal as creative as it was audacious, es- membered as the inventor of the McDonald’s Big Mac “clamshell” container with about$1.5 million, and raising $1 million from the former Hambrecht & Quist, a San Francisco investmentbank. Blaine Huntsman can remem- cal Co. for $1.1 billion in 1994, for instance, he visited Port Arthur and Port Neches, Texas, the two major manufacturingsites, every other week for the first few months. And Peter Huntsman moved to Houston. 1995 Buys back 40% stake in 3 Huntsman Chemical from Great # Lakes Chemical for $250 nition. Forty-six at the time and worth Shell's Belpre site, Huntsman started calling on customers, borrowing against their houses hard work begins. He immerses himself in a business after an acquisition. _ When he boughtTexaco Chemi- Press Holdings. for Industries for $2.8 9,1 onion eae less than $5 million, Huntsman convinced Shell tosell the plantfor join him in starting Huntsman ContainerCorp. } aco. : 1974 Gane clamshell container for McDonald's for Big Mac. Creates more than70 products — out two-thirds of them failures. 3 of the company, worth about $6 million in today’s dollars. As part. of the deal, he was required to remain presidentfor four years. Huntsman polystyrene prices, for four Karen ace such Gi as mae Haight, fecordings, oni fig: Steet es 0 Fok & met in junior ROL,through television high school. me ; Sources: HuntsmanCorp., Glorious Accidents by Michael Glauser, ‘The Salt Lake Tribune Now Focused of stejeep drop in Sees Paha ca where re father ok aie The Philanthropist: Huntsman began giving away millionsof dollars in the 1980s. And as Huntsman Corp. has grown, philanthropy. so has his |