Utah's Huntsman Corp. has extended its merger agreement with Hexion Specialty Chemicals by three months as it continues its campaign to force the Apollo Management unit to honor its commitments.

The company, which operates from both Salt Lake City and The Woodlands, Texas, said it extended the merger agreement through Oct. 2, and has filed its answer and counterclaims to Hexion's lawsuit in Delaware.

In that filing, Huntsman is asking the Delaware court to prevent Hexion from continuing to breach the pact between the two chemical makers and order it to perform under the merger accord that remains in place.

"As I have said repeatedly, we will take very available action on behalf of our shareholders to cause Hexion to live up to the merger agreement," Huntsman's Chairman Jon Huntsman Sr. said Wednesday in a statement announcing the extension.

By extending the deal three months, the Utah company is saying it isn't willing to let Hexion out of its commitments by letting the merger agreement expire.

"We're saying it is not too late to get this deal done," Huntsman spokesman Russ Stolle said.

Hexion indicated last month it wanted out of the $10.6 billion deal. It sued Huntsman in Delaware court arguing that the Utah company's prospects had deteriorated to the point that if a merger took place the resulting company would be insolvent.

Huntsman, which disputes Hexion's view of its prospects, responded by suing Apollo Management partners Leon Black and Joshua Harris in a Texas court for more than $3 billion.

Hexion said that under the merger agreement Huntsman is allowed to extend the termination date only if its board of directors determines in good faith that there is a reasonable probability that the transaction can be completed in the new time frame.

"We do not understand how Huntsman's board of directors could in good faith make that determination," Hexion Chairman Craig O. Morrison said in statement issued in response to Huntsman's action. "There is no factual basis to conclude that the combined company would be solvent. As a result, the merger is not viable."

Hexion is basing its position that the combined company will be insolvent on a study by Duff & Phelps, a financial advisory firm it hired. And it contended in its lawsuit that banks probably won't provide debt financing for the transaction because Huntsman's net debt has increased and its earnings were lower than expected since the companies agreed to the merger.

Huntsman's chairman said he continues to believe the deal can be closed.

"I believe, as does the rest of our board, that all of the conditions to closing this merger can and will be satisfied, and that the conditions to Hexion's commitment letter with its lenders can and will be satisfied as well," he said.

Copyright (c) 2008, The Salt Lake Tribune. Distributed by McClatchy-Tribune Information Services.