As filed with the Securities and Exchange Commission on August 13, 1999
Registration No. 333-
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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
Huntsman ICI Chemicals LLC
(Exact Name of Registrant as Specified in its Charter)
---------------
Delaware 2800 87-0630358
(Primary Standard Industrial (I.R.S. Employer
(State or Other Classification Code Number) Identification Number)
Jurisdiction
of Incorporation or
Organization) ---------------
500 Huntsman Way
Salt Lake City, UT 84108
(801) 584-5700
(Address, Including Zip Code and Telephone Number, Including Area Code, of Co-
Registrants' Principal Executive Offices)
---------------
Robert B. Lence, Esq.
Secretary
Huntsman ICI Chemicals LLC
500 Huntsman Way
Salt Lake City, UT 84108
(801) 584-5700
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
---------------
Copy to:
Phyllis G. Korff, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
(212) 735-3000
---------------

Jurisdiction
Exact Name of Additional of Primary Standard Industrial I.R.S. Employer
Registrants Incorporation Classification Code Number Identification Number
- ------------------------ -------------- --------------------------- ---------------------

Huntsman ICI Financial
LLC*................... Delaware 2800 87-0632917
Tioxide Group*.......... U.K. 2800 00-0000000
Tioxide Americas Inc.*.. Cayman Islands 2800 98-0015568

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* Address and telephone of principal executive offices are the same as those
of Huntsman ICI Chemicals LLC.

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]

CALCULATION OF REGISTRATION FEE

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Title of Class of Proposed Maximum Proposed Maximum
Securities to be Amount to be Offering Price Aggregate Amount of
Registered Registered per Note(1) Offering Price(1) Registration Fee
- ----------------------------------------------------------------------------------------------

10 1/8% Senior
Subordinated Notes due
2009.................. $600,000,000 100% $600,000,000 $166,800
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10 1/8% Senior
Subordinated Notes due
2009.................. (Euro)200,000,000 100% (Euro)200,000,000 $59,826(2)
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Guarantees............. (3) (3) (3) None
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) promulgated under the Securities Act of 1933,
as amended.
(2) Calculated using an exchange rate of (Euro)1.00 = $1.076.
(3) No separate consideration will be received for the guarantees.
---------------
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment that specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until this registration statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.

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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information contained in this preliminary prospectus is not complete and +
+may be changed. We may not sell these securities until the registration +
+statement filed with the Securities and Exchange Commission is effective. +
+This prospectus is not an offer to sell these securities and is not +
+soliciting an offer to buy these securities in any state where the offer or +
+sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to completion--Dated August 13, 1999.

PRELIMINARY PROSPECTUS

[LOGO OF HUNTSMAN APPEARS HERE]

[LOGO OF ICI APPEARS HERE]

Huntsman ICI Chemicals LLC

Exchange Offer for

$600,000,000 10 1/8% Senior Subordinated Notes due 2009
(Euro)200,000,000 10 1/8% Senior Subordinated Notes due 2009

-----------

This exchange offer will expire at , New York City Time,
on , 1999, unless extended.

-----------

Terms of the exchange offer:

. We will exchange all outstanding notes that are validly tendered and not
withdrawn prior to the expiration of the exchange offer.

. You may withdraw tendered outstanding notes at any time prior to the
expiration of the exchange offer.

. We believe that the exchange of outstanding notes will not be a taxable
exchange for United States federal income tax purposes, but you should see
the section entitled "Certain U.S. Federal Tax Consequences" on page for
more information.

. The terms of the notes to be issued are substantially identical to the
terms of the outstanding notes, except for transfer restrictions and
registration rights relating to the outstanding notes.

. We will not receive any proceeds from the exchange offer.

. There is no existing market for the notes to be issued, and we do not
intend to apply for their listing on any securities exchange other than
the Luxembourg Stock Exchange.

See the "Description of Notes" section on page 103 for more information about
the notes to be issued in this exchange offer.

This investment involves risks. See the section entitled "Risk Factors" that
begins on page 18 for a discussion of the risks that you should consider prior
to tendering your outstanding notes for exchange.

-----------

Neither the Securities and Exchange Commission nor any state securities and
exchange commission has approved or disapproved of these securities or passed
upon the adequacy or the accuracy of this prospectus. Any representation to the
contrary is a criminal offense.

-----------

Prospectus dated , 1999.

TABLE OF CONTENTS

Page
----

Market and Industry Data................................................. iii
Where You Can Find More Information...................................... iii
Cautionary Notice Regarding Forward-Looking Statements................... iii
Prospectus Summary....................................................... 1
Risk Factors............................................................. 18
The Exchange Offer....................................................... 28
The Transaction.......................................................... 37
Use of Proceeds.......................................................... 40
Capitalization........................................................... 41
Unaudited Pro Forma Financial Data....................................... 43
Selected Historical Financial Data....................................... 48
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 50
Business................................................................. 66
Management............................................................... 91
Certain Relationships and Related Transactions........................... 96
Description of Credit Facilities......................................... 101
Description of Notes..................................................... 103
Plan of Distribution..................................................... 150
Certain U.S. Federal Tax Consequences.................................... 151
Legal Matters............................................................ 153
Experts.................................................................. 154
General Listing Information.............................................. 154
Index to Financial Statements............................................ F-1

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Our principal executive offices are located at 500 Huntsman Way, Salt Lake
City, Utah 84108, and our telephone number is (801) 584-5700.

MARKET AND INDUSTRY DATA

Market data used throughout this prospectus was obtained from internal
company surveys and industry surveys and publications. Industry surveys and
publications generally state that the information contained therein has been
obtained from sources believed to be reliable, but there can be no assurance as
to the accuracy and completeness of such information. We have not independently
verified such market data. Similarly, internal company surveys, while believed
to be reliable, have not been verified by any independent sources.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-4 under the Securities Act of 1933 with respect to the
notes offered in this prospectus. This prospectus, which forms part of the
registration statement, does not contain all of the information that is
included in the registration statement. You will find additional information
about our company and the notes in the registration statement. Any statements
made in this prospectus concerning the provisions of legal documents are not
necessarily complete and you should read the documents that are filed as
exhibits to the registration statement for a more complete understanding of the
document or matter.

After the registration statement becomes effective, we will be subject to
the informational requirements of the Exchange Act of 1934, and will file
periodic reports, registration statements and other information with the SEC.
You may read and copy the registration statement and any of the other documents
we file with the SEC at the public reference facilities maintained by the SEC
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the SEC's regional offices located at 7 World Trade Center, New York,
New York 10048 and at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Please call the SEC at 1-800- SEC-0330 for more
information on the public reference rooms. In addition, reports and other
filings are available to the public on the SEC's web site at
http://www.sec.gov.

If for any reason we are not subject to the reporting requirements of the
Securities Exchange Act of 1934 in the future, we will still be required under
the indenture governing the notes to furnish the holders of the notes with
certain financial and reporting information. See "Description of Notes--
Covenants--Reports" for a description of the information we are required to
provide.

----------------

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this prospectus are forward-looking in
nature. In some cases, you can identify forward-looking statements by
terminology such as "believes," "expects," "may," "will," "should," or
"anticipates" or the negative of such terms or other comparable terminology, or
by discussions of strategy. You are cautioned that our business and operations
are subject to a variety of risks and uncertainties and, consequently, our
actual results may materially differ from those projected by any forward-
looking statements. Some of those risks and uncertainties are discussed below
under "Risk Factors". We make no commitment to revise or update any forward-
looking statements in order to reflect events or circumstances after the date
any such statement is made.

iii

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this prospectus. As
used in this prospectus, the term "company", "Huntsman ICI Chemicals", "we",
"us" or "our" means Huntsman ICI Chemicals LLC, a Delaware limited liability
company formed on March 23, 1999, and, unless the context otherwise requires,
its consolidated subsidiaries and partnerships. Unless stated otherwise,
references to capacities of our facilities refer to the "nameplate capacity",
or theoretical maximum production capacity, of such facilities; however, the
effective capacity of such facilities may actually be less than the nameplate
capacity due to the current operating conditions and asset configuration of
each facility. All references to "tonnes" are to metric tonnes.

The Company

General

We are a leading global manufacturer and marketer of specialty and
commodity chemicals through our four principal businesses: polyurethane
chemicals, propylene oxide, petrochemicals, and titanium dioxide. Our company
is characterized by leading market positions; superior low cost operating
capabilities; a high degree of technological expertise; a diversity of
products, end markets and geographic regions served; significant product
integration; and strong growth prospects.

. Our global polyurethane chemicals business is the world's second largest
producer of methylene diphenyl diisocyanate, commonly referred to in the
chemicals industry as "MDI", and MDI-based polyurethane systems. Our
customers use our products in a wide variety of polyurethane applications,
including automotive interiors, refrigeration and appliance insulation,
construction products, footwear, furniture cushioning and adhesives.

. Our propylene oxide business is one of three North American producers of
propylene oxide, which is commonly referred to in the chemicals industry as
"PO". PO is used in a variety of applications, the largest of which is the
production of polyols sold into the polyurethane chemicals market.

. Our petrochemicals business produces olefins and aromatics at our world-
scale, highly integrated facilities in Northern England. These products are
the key building blocks for the petrochemical industry and are used in
plastics, synthetic fibers, packaging materials and a wide variety of other
applications.

. Our titanium dioxide business, which operates under the trade name
"Tioxide", is the largest titanium dioxide producer in Europe and the third
largest producer in the world. Titanium dioxide, which is commonly referred
to in the chemicals industry as "TiO\\2\\", is a white pigment used to
impart whiteness, brightness and opacity to products such as paints,
plastics, paper, printing inks, synthetic fibers and ceramics.

For the twelve months ended March 31, 1999, we had pro forma revenues of $3.6
billion, pro forma EBITDA of $424 million and pro forma Adjusted EBITDA of $483
million (see footnote 2 to "--Summary Historical and Pro Forma Financial
Data"). For the year ended December 31, 1998, we derived 54%, 33%, 9% and 4% of
our pro forma revenues in Europe, the Americas, Asia and the rest of the world,
respectively. For the year ended December 31, 1998, our polyurethane chemicals,
PO, petrochemicals and TiO\\2\\ businesses represented 37%, 9%, 28% and 26% of
pro forma revenues, respectively.

Polyurethane Chemicals

We are one of the leading polyurethane chemicals producers in the world. We
market a complete line of polyurethane chemicals, including MDI, toluene
diisocyanate, which is commonly referred to in the chemicals industry as "TDI",
polyols, polyurethane systems and aniline, with an emphasis on MDI-based
chemicals. We are the world's second largest producer of MDI and MDI-based
polyurethane systems, with an estimated 24% global MDI market share. Our
customers produce polyurethane products through the combination of an
isocyanate, such as MDI or TDI, with polyols, which are derived largely from PO
and ethylene oxide. Primary polyurethane end-uses include automotive interiors,
refrigeration and appliance insulation, construction products, footwear,
furniture cushioning, adhesives and other specialized engineering applications.
According to Chem Systems, an international consulting and research firm,
global consumption of MDI was approximately 4.6 billion pounds in 1998, growing
from 2.9 billion pounds in 1992, which represents an 8.1% compound annual
growth rate. This high growth rate is the result of the broad end-uses for MDI
and its superior performance characteristics relative to other polymers.

Our polyurethane chemicals business is widely recognized as an industry
leader in utilizing state-of-the-art application technology to develop new
polyurethane chemical products and applications. Approximately 30% of our 1998
polyurethane chemicals sales were generated from products and applications
introduced in the last three years. Our rapid rate of new product and
application development has led to a high rate of product substitution, which
in turn has led to MDI sales volume growth for our business of approximately
9.2% per year over the past 10 years, a rate in excess of the industry growth
rate. Largely as a result of our technological expertise and history of product
innovation, we have enjoyed long-term relationships with a diverse customer
base, including BMW, Nike, Louisiana Pacific, Ford, Weyerhaeuser,
DaimlerChrysler, Whirlpool, Bosch-Siemens and Electrolux.

We own the world's two largest MDI production facilities, located in
Rozenburg, Netherlands and Geismar, Louisiana, which are back-integrated into
the world's two largest aniline facilities, located in Wilton, U.K. and
Geismar, Louisiana. Since 1996, we have invested over $500 million to
significantly enhance our production capabilities through the rationalization
of our older, less efficient facilities and the modernization of our newer
facilities. According to Chem Systems, we are the lowest cost MDI producer in
the world, largely due to the scale of our operations, our modern facilities
and our back-integration into primary raw materials.

Propylene Oxide

We are one of three North American producers of PO. Our customers process
PO into derivative products such as polyols for polyurethane products,
propylene glycol, which is commonly referred to in the chemicals industry as
"PG", and various other chemical products. End uses for these derivative
products include applications in the home furnishings, construction, appliance,
packaging, automotive and transportation, food, paints and coatings and
cleaning products industries. According to Chem Systems, U.S. consumption of PO
was approximately 3.7 billion pounds in 1998, growing from 2.8 billion pounds
in 1992, which represents a 4.9% compound annual growth rate. Our PO business
is also the third largest U.S. marketer of PG which is used primarily to
produce unsaturated polyester resins for bath and shower enclosures and boat
hulls, and to produce heat transfer fluids and solvents. As a co-product of our
PO manufacturing process, we also produce methyl tertiary butyl ether, which is
commonly referred to in the chemicals industry as "MTBE". MTBE is an oxygenate
that is blended with gasoline to reduce harmful vehicle emissions and to
enhance the octane rating of gasoline.

Our PO business utilizes our proprietary technology to manufacture PO and
MTBE at our state-of-the-art facility in Port Neches, Texas. This facility,
which is the most recently built PO manufacturing facility in North America,
was designed and built under the supervision of Texaco and began commercial
operations in August 1994. According to Chem Systems, we are one of the lowest
cost PO producers in North America, largely due to our proprietary production
process. Since acquiring the facility in 1997, we have increased its PO
capacity by approximately 30% through a series of low cost debottlenecking and
process improvement projects. The current capacity of the PO facility is
approximately 525 million pounds of PO per year. We produce PG under a tolling
arrangement with Huntsman Corporation, which has the capacity to produce
approximately 120 million pounds of PG per year at a neighboring facility.

Petrochemicals

We are a leading, highly-integrated European olefins and aromatics
producer. Olefins, principally ethylene and propylene, are the largest volume
basic petrochemicals and are the key building blocks from which many other
chemicals are made. For example, olefins are used to manufacture most plastics,
resins, adhesives, synthetic rubber and surfactants which are used in a variety
of end-use applications. Aromatics are basic petrochemicals used in the
manufacture of polyurethane chemicals, nylon, polyester fiber and a variety of
plastics.

Our olefins facility at Wilton, U.K. is one of Europe's largest and lowest
cost olefins facilities. Our Wilton olefins facility has the total capacity to
produce approximately 1.9 billion pounds of ethylene, 880 million pounds of
propylene and 200 million pounds of butadiene per year. We sell over 84% of our
olefins volume through long-term contracts with Union Carbide, European Vinyls
Corporation (through contractual arrangements with Imperial Chemical Industries
PLC, which is referred to in this prospectus as "ICI"), ICI, Targor, BASF, BP
Chemicals and others, and over 80% of our total volume is transported via
direct pipelines to customers or consumed internally. The Wilton olefins
facility benefits from its feedstock flexibility and superior logistics, which
allows for the processing of naphtha, condensates and liquid petroleum gases,
which are commonly referred to in the chemicals industry as "LPGs".

We produce aromatics at our two integrated manufacturing facilities located
in Wilton, U.K. and North Tees, U.K. We are Europe's largest cyclohexane
producer with 605 million pounds of annual capacity, Europe's second largest
paraxylene producer with 730 million pounds of annual capacity and Europe's
third largest benzene producer with 990 million pounds of annual capacity.
Additionally, we have the annual capacity to produce 275 million pounds of
cumene. We use all of the benzene produced by our aromatics business internally
in the production of nitrobenzene for our polyurethane chemicals business and
for the production of cyclohexane and cumene. The balance of our aromatics
products are sold to several key customers, including DuPont, BASF and
Phenolchemie. Our aromatics business has recently entered into a contract to
purchase reformate feedstock from Shell Trading International Limited which
will allow us to shut down a portion of our aromatics facilities and
permanently reduce fixed production costs while maintaining production of key
products. We believe that this contract will improve the future profitability
of our aromatics business.

Titanium Dioxide

making it superior to other white pigments. According to International Business
Management Associates, an industry research and consulting firm, global
consumption of TiO\\2\\ was approximately 3.5 million tonnes in 1998, growing
from 3.0 million tonnes in 1992, representing a 2.8% compound annual growth
rate which approximates global GDP growth.

We offer an extensive range of products that are sold worldwide to over
3,000 customers in all major TiO\\2\\ end markets and geographic regions. The
geographic diversity of our manufacturing facilities allows our TiO\\2\\
business to service local customers, as well as global customers that require
multiple delivery points. Our major customers include Akzo Nobel, Cabot,
Schulman, ICI Paints and General Electric. Our TiO\\2\\ business has an
aggregate annual capacity of approximately 570,000 tonnes (approximately
515,000 tonnes of effective capacity in 1998) at our nine production
facilities. Five of our TiO\\2\\ manufacturing plants are located in Europe,
two are in North America, including a 50% interest in a manufacturing joint
venture with NL Industries, one is in Asia, and one is in South Africa (a 60%
owned subsidiary).

We are the second lowest cost TiO\\2\\ producer worldwide, according to
International Business Management Associates. To further enhance our cost
position, we have embarked on a comprehensive cost reduction program which has
eliminated approximately $50 million of annualized cash costs since 1996, with
an additional $30 million of annualized savings expected to be achieved by the
end of 2001. As part of this program, we have reduced the number of product
grades that we produce, focusing on those with wider applications. This program
has resulted in reduced total plant set-up times and further improved product
quality, product consistency, customer service and profitability.

Competitive Strengths

Our company is characterized by the following strengths:

. Leading Market Positions in Attractive Industries--We are the second largest
producer of MDI and MDI-based polyurethane systems in the world, with an
estimated 24% worldwide market share. We are the largest TiO\\2\\ producer
in Europe and the third largest producer worldwide, with an estimated 13%
global market share. In addition, we are one of three North American
producers of PO. Each of the MDI, TiO\\2\\ and PO industries is
characterized by a small number of global competitors, significant
requirements for entry in the form of capital, time and technological know-
how and consistently attractive long-term growth rates.

. Low Cost Producer--According to Chem Systems and International Business
Management Associates, we are among the lowest cost producers of MDI, PO,
olefins and TiO\\2\\. Since 1996, we have invested over $500 million to
significantly enhance our production capabilities for polyurethane
chemicals. As a result of this investment, our polyurethane chemicals
business owns the world's two largest and most modern MDI manufacturing
facilities, which are back-integrated into the world's two largest aniline
facilities. Due to the scale and integration of our facilities, we are the
world's lowest cost MDI manufacturer. Our PO facility, because of its recent
construction and its proprietary production process, is one of the lowest
cost producers of PO. We are among the lowest cost olefins producers in
Europe and the second lowest cost TiO\\2\\ producer in the world. We believe
that these low cost positions provide us with a key competitive advantage
and allow us to achieve enhanced operating margins.

. Product and Process Innovation--We have a demonstrated track record of
technological expertise, continuous process innovation and new product
development. We have consistently increased the capacity of our existing
facilities with minimal capital investment, and believe opportunities for
further expansion exist within our current asset base. For example, over the
last two years, we increased our PO capacity by approximately 30% through a
series of low cost debottlenecking and process improvement projects. In
addition, we maintain extensive research and development capabilities
worldwide that have allowed us to generate a steady flow of new products and
enhancements to existing products. For example, approximately 30% of our
polyurethane chemicals sales are from products introduced over the past
three years.

. Global Presence--We have over 40 manufacturing and technical support
facilities located strategically in 18 countries worldwide, covering all the
major regional consumption areas for our products. We have extensive
worldwide operations in the production and marketing of MDI, MDI-based
polyurethane systems and TiO\\2\\. Our global reach in polyurethane
chemicals and TiO\\2\\ allows us to service local customers, as well as
globally oriented customers that require supplier proximity on a worldwide
basis.

. Diverse Revenue Base--Our four businesses generate revenue and cash flow
from a highly diverse base of products, customers, geographic regions and
end-use markets. We market products in over 60 countries to over 5,000
customers in a wide-variety of end-use markets and applications, including
automotive interiors, refrigeration and appliance insulation, construction
products, footwear, furniture cushioning, adhesives, packaging, food,
coatings, cleaning products, heat transfer fluids, solvents, synthetic
rubber, surfactants, paints, paper, printing inks, synthetic fibers,
ceramics and various other applications. We believe that this diversity
reduces our exposure to any particular industry, product market, customer or
geographic region. In addition, this diversity provides us with a broad base
from which to increase sales and expand customer relationships.

Business Strategy

We intend to capitalize on opportunities that exist across and within each
of our four business segments as follows:

Company Strategies

. Improve Operating Efficiencies and Reduce Costs--In the past, ICI operated
our polyurethane chemicals, petrochemicals and TiO\\2\\ businesses as three
separate businesses. We intend to employ the management practices that
Huntsman Corporation has utilized historically in its acquired businesses by
leveraging its management capabilities, experience and entrepreneurial
culture to increase operating efficiencies and reduce costs. More
specifically, we intend to share services with Huntsman Corporation across
our business groups in the areas of manufacturing, purchasing, research and
development, human resources, finance, legal and environmental, health and
safety. We expect to realize significant cost savings in these and other
areas, as well as through the continuation of specific cost reduction
initiatives already underway in our businesses.

. Grow Through Technology and Innovation--We intend to continue to focus on
developing customized products to meet the needs of a growing number of
customer and end market demands. We are a recognized innovation leader in
the polyurethane chemicals business, and we have continually upgraded and
modified our TiO\\2\\ product range to serve our customers' needs and
increase product life cycles. Additionally, Huntsman Corporation management
has a proven track record in its specialty oriented business lines of
maintaining a low-cost production position while remaining a market and
product innovator. We will continue to maintain research and development
activities and investments to promote continued process and product
innovation and manufacturing efficiency.

Business Segment Strategies

. Polyurethane Chemicals and PO--We intend to optimize the integration
opportunities that exist between our polyurethane chemicals and PO
businesses in order to expand the product line that we offer to the
polyurethane industry. As our existing PO contracts expire, we intend to
evaluate selective opportunities to utilize our PO internally to increase
the scope and scale of our specialty polyol offerings at improved
profitability. We believe we will be able to use our PO production in this
manner as a platform for growth in MDI and TDI sales. Additionally, we
believe that by managing our products and technologies together with
Huntsman Corporation's existing polyurethane catalyst, polyol and amine
technologies, further benefits will be created for our company.

. Petrochemicals--We believe our olefins and aromatics facilities have been
historically underutilized and that a significant opportunity exists to
increase operating rates, expand output and reduce manufacturing costs at
these units. In many cases, Huntsman Corporation utilizes technologies and
facilities similar to those used at our olefins and aromatics facilities and
operates those assets at higher rates and at a lower cost. Moreover, the
olefins and aromatics businesses had been held for sale by ICI for a
significant period of time and, as a result, we believe new marketing
opportunities relative to these businesses had been limited. We believe that
under Huntsman Corporation management, these opportunities will be created
and captured.

. TiO\\2\\--We intend to continue to improve our competitiveness and market
position by focusing on reducing costs, enhancing our product offerings and
strengthening our customer relationships through technical service and
customer support. Approximately $50 million of annualized cash cost savings
have been achieved since 1996 and further annualized cost savings of $30
million are expected to be achieved by the end of 2001, further improving
our low cost position. We believe that our TiO\\2\\ business will also be
able to improve the utilization of our assets by taking advantage of
opportunities to increase sales to manufacturers of paints and coatings,
some of whom may have been reluctant to purchase products from our TiO\\2\\
business when it was solely owned by ICI, a significant competitor in the
paints and coatings industry.

Management and Ownership

Huntsman Corporation, one of the world's largest privately owned chemical
companies, which is controlled by Jon M. Huntsman and members of his family,
and its affiliates indirectly own 60% of our common equity interests. Huntsman
Corporation is a global, vertically integrated company distinguished by leading
market positions, breadth of product offerings, superior operating capabilities
and a track record of growth. Since 1983, Huntsman Corporation and its
predecessors have successfully completed over 35 acquisitions and investments
in joint ventures to build a global chemicals business. Imperial Chemical
Industries PLC, a U.K. publicly traded specialty products and paints company
that is referred to in this prospectus as "ICI", indirectly owns 30% of our
common equity interests. Since its incorporation in 1926, ICI has been one of
the major industrial chemical organizations in the world with an impressive
record of innovation. The remainder of our common equity interests is
indirectly owned collectively by BT Capital Investors, L.P., Chase Equity
Associates, L.P. and The Goldman Sachs Group, Inc.

The Transaction

At the close of business on June 30, 1999 pursuant to a contribution
agreement and ancillary agreements between our company, Huntsman Specialty
Chemicals Corporation, ICI and our parent, Huntsman ICI Holdings LLC, we
acquired assets and stock representing ICI's polyurethane chemicals, selected
petrochemicals (including ICI's 80% interest in the Wilton olefins facility)
and TiO\\2\\ businesses and Huntsman Specialty's PO business. In addition, at
the close of business on June 30, 1999, we also acquired the remaining 20%
ownership interest in the Wilton olefins facility from BP Chemicals Limited.

In exchange for transferring its business to us, Huntsman Specialty (1)
retained a 60% common equity interest in Huntsman ICI Holdings and (2) received
approximately $360 million in cash. In exchange for transferring its businesses
to us, ICI received (1) a 30% common equity interest in Huntsman ICI Holdings,
(2) approximately $2 billion in cash that was paid in a combination of U.S.
dollars and euros and (3) discount notes of Huntsman ICI Holdings with $508
million of accreted value at issuance. The obligations of the discount notes
from Huntsman ICI Holdings are non-recourse to us. BT Capital Investors, L.P.,
Chase Equity Associates, L.P. and The Goldman Sachs Group, Inc. acquired the
remaining 10% common equity interest in Huntsman ICI Holdings for $90 million
in cash.

Cash Sources (in millions)

Senior secured credit facilities... $1,685
The notes.......................... 807
Cash equity(b)..................... 90
------
Total cash sources................ $2,582
======

Cash Uses

Cash to ICI and BP Chemicals...... $2,140
Cash to Huntsman Specialty(a).... 360
Transaction fees and expenses.... 82
------
Total cash uses.....................$2,582
======

- --------
(a) Used for the repayment of Huntsman Specialty debt and the acquisition of
Huntsman Specialty preferred stock.
(b) Represents $90 million cash contribution for 10% of our common equity. This
implies a $900 million common equity value for our company.

The Exchange Offer

Securities Offered.................. $600,000,000 aggregate principal amount
of new 10 1/8% Senior Subordinated Notes
due 2009 and (Euro)200,000,000 aggregate
principal amount of new 10 1/8% Senior
Subordinated Notes due 2009, all of which
have been registered under the Securities
Act of 1933. The terms of the notes
offered in the exchange offer are
substantially identical to those of the
outstanding notes, except that certain
transfer restrictions, registration
rights and liquidated damages provisions
relating to the outstanding notes do not
apply to the new registered notes.

The Exchange Offer.................. We are offering to issue registered notes
in exchange for a like principal amount
and like denomination of our outstanding
notes. We are offering to issue these
registered notes to satisfy our
obligations under an exchange and
registration rights agreement that we
entered into with the initial purchasers
of the outstanding notes when we sold
them in a transaction that was exempt
from the registration requirements of the
Securities Act. You may tender your
outstanding notes for exchange by
following the procedures described under
the heading "The Exchange Offer".

Tenders; Expiration Date; The exchange offer will expire at ,
Withdrawal.......................... New York City time, on , 1999,
unless we extend it. If you decide to
exchange your outstanding notes for new
notes, you must acknowledge that you are
not engaging in, and do not intend to
engage in, a distribution of the new
notes. You may withdraw any notes that
you tender for exchange at any time prior
to , 1999. If we decide for any
reason not to accept any notes you have
tendered for exchange, those notes will
be returned to you without cost promptly
after the expiration or termination of
the exchange offer. See "The Exchange
Offer--Terms of the Exchange Offer" for a
more complete description of the tender
and withdrawal provisions.

Conditions to the Exchange Offer.... The exchange offer is subject to
customary conditions, some of which we
may waive.

U.S. Federal Tax Consequences....... Your exchange of outstanding notes for
notes to be issued in the exchange offer
should not result

in any gain or loss to you for U.S.
federal income tax purposes. See "Certain
U.S. Federal Tax Consequences" for a
general summary of material United States
federal income tax consequences
associated with the exchange of
outstanding notes for the notes to be
issued in the exchange offer and the
ownership and disposition of those new
notes.

Use of Proceeds..................... We will not receive any cash proceeds
from the exchange offer.

Exchange Agent...................... Bank One, N.A.

Consequences of Failure to Outstanding notes that are not tendered
Exchange............................ or that are tendered but not accepted
will continue to be subject to the
restrictions on transfer that are
described in the legend on those notes.
In general, you may offer or sell your
outstanding notes only if they are
registered under, or offered or sold
under an exemption from, the Securities
Act and applicable state securities laws.
We, however, will have no further
obligation to register the outstanding
notes. If you do not participate in the
exchange offer, the liquidity of your
notes could be adversely affected.

Consequences of Exchanging Your Based on interpretations of the staff of
Notes............................... the SEC, we believe that you may offer
for resale, resell or otherwise transfer
the notes that we issue in the exchange
offer without complying with the
registration and prospectus delivery
requirements of the Securities Act if
you:

. acquire the notes issued in the
exchange offer in the ordinary course
of your business;

. are not participating, do not intend
to participate, and have no
arrangement or undertaking with anyone
to participate, in the distribution of
the notes issued to you in the
exchange offer; and

. are not an "affiliate" of our company
as defined in Rule 405 of the
Securities Act.

If any of these conditions are not
satisfied and you transfer any notes
issued to you in the exchange offer
without delivering a proper prospectus or
without qualifying for a registration
exemption, you may incur liability under
the Securities Act. We will not be
responsible for or indemnify you against
any liability you may incur.

Any broker-dealer that acquires notes in
the exchange offer for its own account in
exchange for outstanding notes, which it
acquired through market-making or other
trading activities, must acknowledge that
it will deliver a prospectus when it
resells or transfers any notes issued in
the exchange offer. See "Plan of
Distribution" for a description of the
prospectus delivery obligations of
broker-dealers in the exchange offer.

The Notes

The terms of the notes we are issuing in this exchange offer and the
outstanding notes are identical in all material respects, except:

(1) the notes issued in the exchange offer will have been registered under
the Securities Act;

(2) the notes issued in the exchange offer will not contain transfer
restrictions and registration rights that relate to the outstanding
notes; and

(3) the notes issued in the exchange offer will not contain provisions
relating to the payment of liquidated damages to be made to the holders
of the outstanding notes under circumstances related to the timing of
the exchange offer.

A brief description of the material terms of the notes follows:

Issuer.............................. Huntsman ICI Chemicals LLC.

Notes Offered....................... $600,000,000 aggregate principal amount
of dollar denominated 10 1/8% Senior
Subordinated Notes due 2009 and
(Euro)200,000,000 aggregate principal
amount of euro denominated 10 1/8% Senior
Subordinated Notes due 2009.

Maturity Date....................... July 1, 2009.

Interest Payment Dates.............. January 1 and July 1 of each year,
commencing January 1, 2000.

Guarantors.......................... The notes are guaranteed by some of our
subsidiaries. If we cannot make payments
on the notes when they are due, then our
guarantors are required to make payments
on our behalf.

Optional Redemption................. We may redeem the notes, in whole or in
part, at our option at any time on or
after July 1, 2004, at the redemption
prices listed in "Description of Notes--
Optional Redemption".

In addition, on or before July 1, 2002,
we may, at our option and subject to
certain requirements,

use the net proceeds from one or more
public equity offerings to redeem up to
35% of the original aggregate principal
amount of the notes at 110.125% of their
face amount, plus accrued and unpaid
interest. Before July 1, 2004, we may
redeem some or all of the notes at a
redemption price equal to 100% of the
principal amount thereof plus a "make
whole" premium. See "Description of
Notes--Optional Redemption".

Sinking Fund........................ None.

Ranking............................. The notes rank junior to all of our
existing and future senior indebtedness,
and rank senior in right of payment to
all of our future indebtedness that is
expressly subordinated to the notes. See
"Description of Notes--Brief Description
of the Notes and the Guarantees--The
Notes".

The guarantees rank junior in right of
payment to all existing and future senior
indebtedness of our guarantors, and rank
senior in right of payment to all of
their future indebtedness that is
expressly subordinated to the guarantees.
See "Description of Notes--Brief
Description of the Notes and the
Guarantees--The Guarantees".

As of March 31, 1999, we would have had
approximately $1,696 million of senior
indebtedness outstanding if we had
completed our transactions with ICI and
Huntsman Specialty and with BP Chemicals
on that date.

Change of Control................... If we go through a change of control, we
must make an offer to repurchase the
notes at 101% of their face amount, plus
accrued and unpaid interest. See
"Description of Notes--Repurchase at the
Option of Holders upon Change of
Control".

Asset Sales......................... We may have to use the net proceeds from
asset sales to offer to repurchase notes
under certain circumstances at their face
amount, plus accrued and unpaid interest.
See "Description of Notes--Certain
Covenants--Limitation on Asset Sales".

Certain Covenants................... The indenture governing the notes
contains certain covenants that, among
other things, limit our ability and the
ability of certain of our subsidiaries
to:

. incur more debt;

. pay dividends, redeem stock or make
other distributions;

. issue capital stock;

. make certain investments;

. create liens;

. enter into transactions with
affiliates;

. enter into sale and leaseback
transactions;

. merge or consolidate; and

. transfer or sell assets.

These covenants are subject to a number
of important qualifications and
limitations. See "Description of Notes--
Certain Covenants".

Registration Covenant; Exchange In connection with our agreement to
Offer............................... register the exchange notes under the
Securities Act by filing the registration
statement of which this prospectus forms
a part, we have agreed to:

. cause the registration statement to
become effective on or before January
27, 2000; and

. consummate the exchange offer within
45 days after the effective date of
the registration statement.

In addition, we have agreed, in certain
circumstances, to file a "shelf
registration statement" that would allow
some or all of the notes to be offered to
the public.

If we fail to meet any or all the targets
listed above (a "registration default"),
the annual interest rates on the notes
will increase by 0.25% during the first
90-day period during which the
registration default continues, and will
increase by an additional 0.25% for each
subsequent 90-day period during which the
registration default continues, up to a
maximum increase of 1.00% over the
interest rates that would otherwise apply
to the notes. As soon as we cure a
registration default, the interest rates
on the notes will revert to their
original levels.

Upon consummation of the exchange offer,
holders of notes will no longer have any
rights under the exchange and
registration rights agreement, except to
the extent that we have continuing
obligations to file a shelf registration
statement.

For additional information concerning the
above, see "Description of Notes--Form,
Denomination, Transfer, Exchange and
Book-entry Procedures,--Registration
Covenant; Exchange Offer".

Use of Proceeds..................... We will not receive any proceeds from the
exchange offer. We used the net proceeds
from the sale of the notes to fund a
portion of the transfer of ICI's and
Huntsman Specialty's businesses to us and
related fees and expenses, and for
general corporate purposes. See "Use of
Proceeds".

Risk Factors

You should carefully consider all of the information set forth in this
prospectus and, in particular, the specific factors set forth under the "Risk
Factors" section before deciding to tender your outstanding notes in the
exchange offer.

Summary Historical and Pro Forma Financial Data

The summary financial data set forth below presents the historical
financial data of Huntsman Specialty, our predecessor, and the predecessor of
Huntsman Specialty, as of the dates and for the periods indicated. In
accordance with U.S. GAAP, Huntsman Specialty is considered the acquiror of the
businesses transferred to us in connection with our transactions with ICI and
Huntsman Specialty and with BP Chemicals at the close of business on June 30,
1999 because the shareholders of Huntsman Specialty acquired majority control
of the businesses transferred to us. The summary financial and other data as of
December 31, 1996 has been derived from audited financial statements. The
summary financial and other data as of December 31, 1997 and 1998 and for the
year ended December 31, 1996, the two months ended February 28, 1997, the ten
months ended December 31, 1997 and the year ended December 31, 1998 has been
derived from the audited financial statements of Huntsman Specialty included
elsewhere in this prospectus. The summary financial and other data as of March
31, 1999 and for the three months ended March 31, 1998 and 1999 has been
derived from the unaudited financial statements of Huntsman Specialty included
elsewhere in this prospectus.

The summary unaudited pro forma financial data prepared by us and set forth
below gives effect to our transactions with ICI and Huntsman Specialty and with
BP Chemicals and the related financing thereof, including the offering of the
notes. The summary unaudited pro forma statement of operations data for the
three months ended March 31, 1999 and the year ended December 31, 1998 give
effect to our transaction with ICI and Huntsman Specialty and related financing
thereof, including the offering of the notes, as if they had occurred on
January 1, 1998. The summary unaudited pro forma balance sheet data as of March
31, 1999 gives effect to our transactions with ICI and Huntsman Specialty and
with BP Chemicals and related financing thereof, including the offering of the
notes, as if they had occurred on such date. The summary unaudited pro forma
financial data does not purport to be indicative of the combined financial
position or results of operations of future periods or indicative of results
that would have occurred had our transactions with ICI and Huntsman Specialty
and with BP Chemicals been consummated on the dates indicated. The pro forma
and other adjustments, as described in the accompanying notes to the summary
unaudited pro forma condensed balance sheet and statement of operations data,
are based on available information and certain assumptions that we believe are
reasonable.

You should read the summary historical and unaudited pro forma financial
data in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations", "Unaudited Pro Forma Financial Data", the
audited and unaudited financial statements of Huntsman Specialty and the
audited and unaudited combined financial statements of the polyurethane
chemicals, selected petrochemicals and TiO\\2\\ businesses of ICI, included
elsewhere in this prospectus.

Predecessor(1) Huntsman Specialty(1) Huntsman ICI Chemicals
------------------------- ---------------------------------------- -------------------------
Pro Forma
Two Months Ten Months Three Months Pro Forma Three Months
Year Ended Ended Ended Year Ended Ended Year Ended Ended
December 31, February 28, December 31, December 31, March 31, December 31, March 31,
------------ ------------ ------------ ------------ -------------- ------------ ------------
1996 1997 1997 1998 1998 1999 1998 1999
------------ ------------ ------------ ------------ ------ ------ ------------ ------------
(in millions)

Statement of Operations
Data:
Sales-net: $405 $61 $ 348 $339 $ 86 $ 83 $3,671 $ 870
Cost of sales.......... 377 65 300 277 72 62 3,104 716
---- --- ----- ---- ----- ------ ------ ------
Gross profit (loss).... 28 (4) 48 62 14 21 567 154
Operating expenses..... 19 2 8 8 3 2 353 103
---- --- ----- ---- ----- ------ ------ ------
Operating income
(loss)................ 9 (6) 40 54 11 19 214 51
Interest expense-net.... -- -- 35 40 10 9 219 55
Other income............ 10 -- -- 1 -- -- (9) --
---- --- ----- ---- ----- ------ ------ ------
Income (loss) before
income tax and minority
interest............... 19 (6) 5 15 1 10 4 (4)
Income tax expense
(benefit).............. 7 (2) 2 6 -- 4 51 9
Minority Interest....... -- -- -- -- -- -- 2 --
---- --- ----- ---- ----- ------ ------ ------
Income (loss) from
continuing operations.. $ 12 $(4) $ 3 $ 9 $ 1 $ 6 $ (49) $ (13)
Other Data:
Depreciation and
amortization........... $ -- $ 1 $ 26 $ 31 $ 8 $ 8 $ 201 $ 52
EBITDA(1)(2)............ 49 1 66 86 19 27 424 103
Net cash provided by
(used in) operating
activities............. 48 (5) 37 46 -- 8
Net cash used in
investing activities... (1) (1) (510) (10) (2) (1)
Net cash provided by
(used in) financing
activities............. (47) 6 483 (43) -- --
Capital expenditures.... 1 1 2 10 2 1 232 71
Ratio of earnings to
fixed charges(3)....... 2.7x -- 1.1x 1.4x 1.1x 2.1x 1.0x --
Balance Sheet Data
(at period end):
Working capital(4)...... $ 39 $ 40 $ 28 $ 34 $ 402
Total assets............ 292 594 578 583 4,214
Long-term debt(5)....... -- 464 428 429 2,503
Total liabilities(6).... 287 569 547 548 3,167
Stockholders' equity.... 5 25 31 35 1,047

(See footnotes on next page)

(Footnotes from previous page)
- --------
(1) Effective March 1, 1997, Huntsman Specialty purchased from Texaco Chemical,
Inc. its PO business (see Note 1 to the audited financial statements of
Huntsman Specialty). Prior to March 1, 1997, Texaco Chemical leased
substantially all of the plant and equipment of the PO business under an
operating lease agreement. Also, Texaco Chemical received interest income
on net intercompany advances prior to the acquisition by Huntsman
Specialty. Historical rental expense for the year ended December 31, 1996
and the two months ended February 28, 1997 was $34 million and $6 million,
respectively. Interest income on net intercompany advances was $4 million
for the year ended December 31, 1996. No interest was charged or credited
during the two months ended February 28, 1997.

(2) EBITDA is defined as earnings from continuing operations before interest
expense, depreciation and amortization, and taxes. Prior to March 1, 1997,
EBITDA excludes interest income on net intercompany investments and
advances to Texaco Chemical and rental expense (see footnote (1) above).
EBITDA is included in this prospectus because it is a basis on which we
assess our financial performance and debt service capabilities, and because
certain covenants in our borrowing arrangements are tied to similar
measures. However, EBITDA should not be considered in isolation or viewed
as a substitute for cash flow from operations, net income or other measures
of performance as defined by GAAP or as a measure of a company's
profitability or liquidity. We understand that while EBITDA is frequently
used by security analysts, lenders and others in their evaluation of
companies, EBITDA as used herein is not necessarily comparable to other
similarly titled captions of other companies due to potential
inconsistencies in the method of calculation.

The following other adjustments to pro forma EBITDA do not qualify as pro
forma adjustments under the Securities and Exchange Commission's rules
(principally Article 11 of Regulation S-X), but are included to eliminate the
effect of nonrecurring items.

Three Months
Year Ended Ended
December 31, March 31,
1998 1999
------------ ------------
(in millions)

EBITDA............................................ $405 $103
To conform the accounting policy for turnaround
and inspection costs of the petrochemicals
business........................................ 19 --
---- ----
Pro forma EBITDA.................................. 424 103
Net reduction in corporate overhead allocation
and insurance expenses.......................... 21 6
Impact of PO facility turnaround and inspection.. 19 --
Rationalization of TiO\\2\\ operations........... 17 2
---- ----
Pro forma Adjusted EBITDA......................... $481 $111
==== ====

Pro forma Adjusted EBITDA does not include any amounts related to our
transaction with BP Chemicals on June 30, 1999. We believe that pro forma
Adjusted EBITDA for the year ended December 31, 1998 would have increased by
approximately $16 million to approximately $497 million had our transaction
with BP Chemicals at the close of business on June 30, 1999 been consummated
on January 1, 1998.

(3) The ratio of earnings to fixed charges has been calculated by dividing (1)
the sum of income before taxes plus fixed charges by (2) fixed charges.
Fixed charges are equal to interest expense (including amortization of
deferred financing costs), plus the portion of rent expense estimated to
represent interest. Earnings were insufficient to cover fixed charges by $6
million and $4 million for the two months ended February 28, 1997, and, on
a pro forma basis, for the three months ended March 31, 1999.

(4) Working capital represents total current assets, less total current
liabilities, excluding cash and the current maturities of long-term debt.

(5) Long-term debt includes the current portion of long-term debt.

(6) Total liabilities includes mandatorily redeemable preferred stock of $68
million and $72 million at December 31, 1997 and 1998, respectively.

RISK FACTORS

You should carefully consider the risks described below in addition to all
other information provided to you in this prospectus before deciding whether to
participate in this exchange offer. The risk factors described below, other
than those which discuss the consequences of failing to exchange your
outstanding notes in the exchange offer, are generally applicable to both the
outstanding notes and the notes issued in the exchange offer.

You may have difficulty selling the notes that you do not exchange.

If you do not exchange your outstanding notes for the notes offered in this
exchange offer, you will continue to be subject to the restrictions on the
transfer of your notes. Those transfer restrictions are described in the
indenture governing the notes and in the legend contained on the outstanding
notes, and arose because we originally issued the outstanding notes under
exemptions from, and in transactions not subject to, the registration
requirements of the Securities Act.

In general, you may offer or sell your outstanding notes only if they are
registered under the Securities Act and applicable state securities laws, or if
they are offered and sold under an exemption from those requirements. We do not
intend to register the outstanding notes under the Securities Act.

If a large number of outstanding notes are exchanged for notes issued in
the exchange offer, it may be more difficult for you to sell your unexchanged
notes. In addition, if you do not exchange your outstanding notes in the
exchange offer, you will no longer be entitled to have those notes registered
under the Securities Act.

See "The Exchange Offer--Consequences of Failure to Exchange Outstanding
Notes" for a discussion of the possible consequences of failing to exchange
your notes.

Our ability to repay our debt depends upon the performance of our subsidiaries
and their ability to make distributions to us.

The notes are the exclusive obligations of our company and the guarantors
of the notes and not of any of our other subsidiaries. Because a significant
portion of our operations are conducted by our subsidiaries, our cash flow and
our ability to service indebtedness, including our ability to pay the interest
on and principal of the notes when due, are dependent to a large extent upon
cash dividends and distributions or other transfers from our subsidiaries. In
addition, any payment of dividends, distributions, loans or advances by our
subsidiaries to us could be subject to restrictions on dividends or
repatriation of earnings under applicable local law, monetary transfer
restrictions and foreign currency exchange regulations in the jurisdictions in
which our subsidiaries operate, and any restrictions imposed by the current and
future debt instruments of our subsidiaries. Our senior secured credit
facilities currently prohibit, and the indenture governing these notes
currently restricts, these types of payments by our subsidiaries. In addition,
payments to us by our subsidiaries are contingent upon our subsidiaries'
earnings.

Our subsidiaries are separate and distinct legal entities and, except for
the guarantors of the notes, have no obligation, contingent or otherwise, to
pay any amounts due pursuant to the notes or to make any funds available
therefor, whether by dividends, loans, distributions or other payments, and do
not guarantee the payment of interest on, or principal of, the notes. Any right
that we have to receive any assets of any of our subsidiaries that are not
guarantors upon the liquidation or reorganization of those subsidiaries, and
the consequent right of holders of notes to realize proceeds from the sale of
their assets, will be effectively subordinated to the claims of that
subsidiary's creditors, including trade creditors and holders of debt issued by
that subsidiary. In addition, the guarantees of the notes are subordinated to
all indebtedness of each guarantor that is either senior or secured.

We have substantial debt that we may be unable to service and that restricts
our activities.

We have incurred substantial debt in connection with our transactions with
ICI and Huntsman Specialty and with BP Chemicals. As of March 31, 1999, we
would have had total outstanding indebtedness of $2,503 million on a pro forma
basis after giving effect to our transactions with ICI and Huntsman Specialty
and with BP Chemicals and the financing thereof. We require substantial capital
to finance our operations and continued growth, and we may incur substantial
additional debt from time to time for a variety of purposes, including
acquiring additional businesses. However, the terms of the indenture governing
the notes and the senior secured credit facilities contain restrictive
covenants. Among other things, these covenants limit or prohibit our ability to
incur more debt; make prepayments of other debt in whole or in part; pay
dividends, redeem stock or make other distributions; issue capital stock; make
investments; create liens; enter into transactions with affiliates; enter into
sale and leaseback transactions; and merge or consolidate and transfer or sell
assets. Also, if we undergo a change of control, the indenture governing the
notes may require us to make an offer to purchase the notes. Under these
circumstances, we may also be required to repay indebtedness under our credit
facilities prior to the notes. We cannot assure you that we will have the
financial resources necessary to purchase the notes in this event. See
"Description of Notes".

The degree to which we have outstanding debt could have important
consequences for our business, including:

. a substantial portion of our cash flow must be applied towards payment
of principal and interest on our debt, which will reduce funds available
for other purposes, including our operations and future business
opportunities;

. our ability to obtain additional financing may be constrained due to our
existing level of debt;

. a high degree of debt will make us more vulnerable to a downturn in our
business or the economy in general; and

. part of our debt is, and any future debt may be, subject to variable
interest rates, which might make us vulnerable to increases in interest
rates.

We are required to make scheduled principal payments under the credit
facilities commencing on June 30, 2000. Our ability to make scheduled payments
of principal and interest on, or to refinance, our debt depends on our future
financial performance, which, to a certain extent, is subject to economic,
competitive, regulatory and other factors beyond our control. We cannot
guarantee that we will have sufficient cash from our operations or other
sources to service our debt (including the notes). If our cash flow and capital
resources are insufficient to fund our debt service obligations, we may be
forced to reduce or delay capital expenditures, sell assets or seek to obtain
additional equity capital or restructure or refinance our debt. We cannot
guarantee that such alternative measures would be successful or would permit us
to meet our scheduled debt service obligations. In the absence of such
operating results and resources, we could face substantial liquidity problems
and might be required to dispose of material assets or operations to meet our
debt service obligations. We cannot guarantee our ability to consummate any
asset sales or that any proceeds from an asset sale would be sufficient to meet
the obligations then due.

If we are unable to generate sufficient cash flow and we are unable to
obtain the funds required to meet payments of principal and interest on our
indebtedness, or if we otherwise fail to comply with the various covenants in
the instruments governing our indebtedness, including those under the credit
facilities and the indenture governing the notes, we could be in default under
the terms of those agreements. In the event of a default by us, a holder of the
indebtedness could elect to declare all of the funds borrowed under those
agreements to be due and payable together with accrued and unpaid interest, the
lenders under the credit facilities could elect to terminate their commitments
thereunder and we could be forced into bankruptcy or liquidation. Any default
under the agreements

governing our indebtedness could have a material adverse effect on our ability
to pay principal and interest on the notes and on the market value of the
notes.

Our ability to repay our debt may be affected by joint venture arrangements.

We conduct a substantial amount of our operations through our joint
ventures. Our ability to meet our debt service obligations depends, in part,
upon the operation of our joint ventures. If any of our joint venture partners
fails to observe its commitments, that joint venture may not be able to operate
according to its business plans or we may be required to increase our level of
commitment to give effect to such plans. In general, joint venture arrangements
may be affected by relations between the joint venture partners. Differences in
views among the partners may, for example, result in delayed decisions or in
failure to agree on significant matters. Such circumstances may have an adverse
effect on the business and operations of the joint ventures, adversely
affecting the business and operations of our company. There can be no assurance
that we and our joint venture partners will always agree on significant issues.
Any such differences in our views or problems with respect to the operations of
the joint ventures could have a material adverse effect on our business,
financial condition, results of operations or cash flows.

The notes are subordinated to senior debt.

The notes are general unsecured obligations and are subordinated in right
of payment to the prior payment of all our current and future senior debt. As
of March 31, 1999, after giving effect to our transaction with ICI and Huntsman
Specialty and the financing thereof, the aggregate principal amount of our
senior debt on a pro forma basis would have been $1,696 million. The effect of
this subordination is that if we were to undergo a bankruptcy, liquidation,
dissolution, reorganization or similar proceeding, our assets would be
available to pay our obligations on the notes only after all senior debt is
paid, and we cannot guarantee that there will be sufficient assets remaining to
pay amounts due on all or any of the notes. Our senior debt under the credit
facilities is secured by liens on substantially all our U.S. assets, including
the stock of certain of our subsidiaries. The notes are unsecured and therefore
do not have the benefit of this collateral. Accordingly, if an event of default
occurs under the credit facilities, the lenders under the credit facilities
will have a right to our assets and may foreclose upon the collateral. In that
case, our assets would first be used to repay in full amounts outstanding under
the credit facilities and may not be available to repay the notes.

Our success depends upon our ability to integrate our businesses.

Prior to our transactions with ICI and Huntsman Specialty and with BP
Chemicals, we did not own the majority of our assets. As you evaluate our
prospects, you should consider the many risks we will encounter during our
process of integrating these acquired businesses, including:

. our potential inability to successfully integrate acquired operations
and businesses or to realize anticipated synergies, economies of scale
or other value;

. diversion of our management's attention from business concerns;

. difficulties in increasing production at acquired sites and
coordinating management of operations at the acquired sites;

. delays in implementing consolidation plans;

. unanticipated legal liabilities; and

. loss of key employees of acquired operations.

The full benefit of the businesses transferred to us in connection with our
transactions with ICI and Huntsman Specialty and with BP Chemicals requires the
integration of administrative functions

and the implementation of appropriate operations, financial and management
systems and controls. If we are unable to integrate our various businesses
effectively, our business, financial condition, results of operations and cash
flows may suffer.

Some of the assets comprising portions of the ICI businesses were not
transferred to us at the closing of our transaction with ICI and Huntsman
Specialty and may never be transferred to us.

Without breaching its obligations to transfer its businesses to us, ICI did
not transfer assets having an aggregate value of no more than 3% of the net
book value of all the assets that were scheduled to be transferred to us by
ICI. In addition, ICI's failure to transfer its joint venture interests in
Nippon Polyurethane Industry Co. Ltd. and Arabian Polyol Company Limited to us
did not constitute a breach of ICI's obligations under the contribution
agreement. Although (1) ICI is obligated to use its reasonable best efforts to
transfer these assets and joint venture interests to us within two years,
during which time ICI will hold the assets for our benefit, and (2) we are
entitled to a purchase price adjustment if ICI does not ultimately transfer
those assets, we can give no assurance as to when, if at all, these assets or
joint venture interests will be transferred to us or what effect the failure to
receive such assets or joint venture interests, and the related revenue
streams, will have on our business, financial condition, results of operations
or cash flows.

The chemicals industry is cyclical.

A substantial portion of our revenue is attributable to sales of products,
the prices of which have been historically cyclical and sensitive to relative
changes in supply and demand, the availability and price of feedstocks and
general economic conditions. Historically, the markets for some of our products
have experienced alternating periods of tight supply, causing prices and
margins to increase, followed by periods of capacity additions, resulting in
oversupply and declining prices and margins. We cannot guarantee that future
growth in demand for these products will be sufficient to alleviate any
existing or future conditions of excess industry capacity or that such
conditions will not be sustained or further aggravated by anticipated or
unanticipated capacity additions or other events. See "--We face significant
competition", "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business--Competition".

There is significant price volatility for many of our raw materials.

The prices for a large portion of our raw materials are similarly cyclical.
While we attempt to match raw material price increases with corresponding
product price increases, our ability to pass on increases in the cost of raw
materials to our customers is, to a large extent, dependent upon market
conditions. There may be periods of time in which we are not able to recover
increases in the cost of raw materials due to weakness in demand for or
oversupply of our products. Therefore, increases in raw material prices may
have a material adverse effect on our business, financial condition, results of
operations or cash flows.

The industries in which we compete are highly competitive.

The industries in which we operate are highly competitive. Among our
competitors are some of the world's largest chemical companies and major
integrated petroleum companies that have their own raw material resources. Some
of these companies are able to produce products more economically than we can.
In addition, many of our competitors are larger and have greater financial
resources, which may enable them to invest significant capital into their
businesses, including expenditures for research and development. If any of our
current or future competitors develop proprietary technology that enables them
to produce products at a significantly lower cost, our technology could be
rendered uneconomical or obsolete. Moreover, certain of our businesses use

technology that is widely available. Accordingly, barriers to entry, apart from
capital availability, are low in certain product segments of our business, and
the entrance of new competitors into the industry may reduce our ability to
capture improving profit margins in circumstances where overcapacity in the
industry is diminishing. Further, petroleum-rich countries have become more
significant participants in the petrochemical industry and may expand this role
significantly in the future. Any of these developments would have a significant
impact on our ability to enjoy higher margins during periods of increased
demand. See "--The chemicals industry is cyclical".

We depend on our key suppliers.

We obtain a significant portion of our raw materials from a few key
suppliers. If any of these suppliers is unable to meet its obligations under
present supply agreements, we may be forced to pay higher prices to obtain the
necessary raw materials and we may not be able to increase prices for our
finished products. In addition, some of the raw materials we use may become
unavailable within the geographic area from which we now source our raw
materials, and there can be no assurance that we will be able to obtain
suitable and cost effective substitutes. Any interruption of supply or any
price increase of raw materials could have a material adverse effect on our
business, financial condition, results of operations or cash flows.

Some of our supply contracts require the consent of the supplier for the
transfer of the contract to us in connection with our transactions with ICI and
Huntsman Specialty and with BP Chemicals. There can be no assurance that we
will receive those consents or that such suppliers will agree to continue to
provide the raw materials on the same terms. If we do not receive these
consents, we may be forced to pay higher prices to obtain necessary raw
materials and we may not be able to increase prices for our finished products.
This could have a material adverse effect on our business, financial condition,
results of operations or cash flows.

Our relationships with Huntsman Corporation and ICI are critical.

We have entered and will continue to enter into certain agreements,
including service, supply and purchase contracts with Huntsman Corporation and
ICI. A breach by Huntsman Corporation or ICI in performing its obligations
under any of these agreements could have a material adverse effect on our
business, financial condition, results of operations or cash flows. There can
be no assurance that we would be able to obtain similar service, supply or
purchase contracts on the same terms from third parties should Huntsman
Corporation or ICI terminate or breach any of these agreements. For example, we
have only one operating facility for our PO business, which is located in Port
Neches, Texas. The facility is dependent on Huntsman Corporation's existing
infrastructure and its adjacent facilities for certain utilities, raw
materials, product distribution systems and safety systems. In addition, we
depend upon employees of Huntsman Corporation to operate our Port Neches
facility. We purchase all of the propylene used in the production of PO through
Huntsman Corporation's pipeline, which is the only existing propylene pipeline
connected to our PO facility. If we were required to obtain propylene from
another source, we would need to make a substantial investment in an
alternative pipeline. This could have a material adverse effect on our
business, financial condition, results of operations or cash flows. See
"Certain Relationships and Related Transactions".

We are subject to many environmental and safety regulations.

The operation of any chemical manufacturing plant, the distribution of
chemical products and the related production of by-products and wastes, entail
risk of adverse environmental effects. We are subject to extensive federal,
state, local and foreign laws, regulations, rules and ordinances relating to
pollution, the protection of the environment and the generation, storage,
handling, transportation, treatment, disposal and remediation of hazardous
substances and waste materials. In the ordinary course of business, we are
subject continually to environmental inspections and

monitoring by governmental enforcement authorities. We may incur substantial
costs, including fines, damages and criminal or civil sanctions, or experience
interruptions in our operations for actual or alleged violations arising under
any environmental laws. In addition, our production facilities require
operating permits that are subject to renewal, modification and, in some
circumstances, revocation. Violations of permit requirements can also result in
restrictions or prohibitions on plant operations, substantial fines and civil
or criminal sanctions. Our operations involve the generation, handling,
transportation, use and disposal of numerous hazardous substances. Changes in
regulations regarding the generation, handling, transportation, use and
disposal of hazardous substances could inhibit or interrupt our operations and
have a material adverse effect on our business. From time to time, these
operations may result in violations under environmental laws, including spills
or other releases of hazardous substances to the environment. In the event of a
catastrophic incident, we could incur material costs as a result of addressing
and implementing measures to prevent such incidents. In February 1999,
hydrochloric acid was accidentally released from the Greatham facility into a
nearby marsh that includes a conservation area. We have an indemnity from ICI
which we believe will cover, in large measure, our liability for this matter.
In addition, certain notices of violation relating to air emissions and waste
water issues have been issued to our Port Neches facility. While these matters
remain pending and could result in fines of over $100,000, we do not believe
any of these matters will be material to us. Given the nature of our business,
we cannot assure you that violations of environmental laws will not result in
restrictions imposed on our operating activities, substantial fines, penalties,
damages or other costs.

In addition, potentially significant expenditures could be necessary in
order to comply with existing or future environmental laws. Our costs and
operating expenses and capital expenditures relating to safety, health and
environmental matters totaled approximately $4 million in 1996, $3 million in
1997 and $3 million in 1998 for our PO business. Environmental expenses and
capital expenditures for our polyurethane chemicals, petrochemicals and
TiO\\2\\ businesses were approximately (Pounds)53 million, (Pounds)44 million
and (Pounds)42 million in 1996, 1997 and 1998, respectively. Costs in 1999 and
2000 are expected to remain at historical levels in order to cover, among other
things, our routine measures to prevent, contain and clean up spills of
materials that occur in the ordinary course of business. Our estimated capital
expenditures for environmental, safety and health matters in 1999 and 2000 are
expected to be similar to historical expenditures. Capital expenditures and, to
a lesser extent, costs and operating expenses relating to environmental matters
will be subject to evolving regulatory requirements and will depend on the
timing of the promulgation and enforcement of specific standards which impose
requirements on our operations. Therefore, we cannot assure you that additional
capital expenditures will not be required under environmental laws. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".

Under certain environmental laws, we may be liable for the costs of
investigating and cleaning up environmental contamination on or from our
properties or at off-site locations where we disposed of or arranged for the
disposal or treatment of hazardous wastes. We are aware that there is or may be
soil or groundwater contamination at some of our facilities resulting from past
operations at these or neighboring facilities. Based on available information
and the indemnification rights that we possess (including indemnities provided
by Huntsman Specialty and ICI for the facilities each transferred in connection
with our transaction with them on June 30, 1999), we believe that the costs to
investigate and remediate known contamination will not have a material adverse
effect on our business, financial condition, results of operations or cash
flows; however, we cannot give any assurance that such indemnities will fully
cover the costs of investigation and remediation, that we will not be required
to contribute to such costs or that such costs will not be material. See
"Business--Environmental Regulations".

Pending or future litigation or legislative initiatives may subject us to
products or environmental liability or materially adversely affect our MTBE
sales.

A co-product of our PO operations is MTBE. MTBE is an oxygenate that
petroleum refiners blend with gasoline to enhance the octane level of gasoline
and to reduce the emissions produced when gasoline is burned. MTBE is used in
many states to meet oxygenated fuels requirements applicable to certain
polluted areas under the federal Clean Air Act. The presence of MTBE in some
groundwater in California and other states (primarily due to gasoline leaking
from underground storage tanks) and in surface water (primarily from
recreational water craft) has led to public concern about MTBE's potential to
contaminate drinking water supplies. Because MTBE is partially soluble in
water, it has a tendency to dissolve more readily than most other gasoline
constituents, making groundwater cleanup more difficult and expensive.

Heightened public awareness regarding this issue has resulted in state and
federal initiatives to rescind the oxygenate requirements for reformulated
gasoline, or to restrict or prohibit the use of MTBE in particular. For
example, in March 1999, the Governor of California ordered that MTBE in
California gasoline be phased out by the end of 2002 and has requested that the
U.S. Environmental Protection Agency waive the federal oxygenated fuels
requirements for gasoline sold in California. Several bills have been
introduced in the U.S. Congress to accomplish similar goals of curtailing or
eliminating the oxygenated fuels requirements in the Clean Air Act, or of
curtailing MTBE use in particular. In November 1998, the EPA established a
committee to review and provide recommendations concerning the requirements for
oxygenated fuels in the Clean Air Act. The committee's findings were released
to the public on July 27, 1999, and include, among other things,
recommendations that (1) MTBE use be reduced substantially, (2) the U.S.
Congress clarify federal and state authority to regulate or eliminate gasoline
additives that threaten water supplies and (3) the U.S. Congress amend the
Clean Air Act to remove certain of the oxygenated fuels requirements for
reformulated gasoline. In a statement issued in response to these
recommendations on July 26, 1999, the administrator of the EPA stated that the
EPA would work with the U.S. Congress to craft a legislative solution that
would allow for a significant reduction in MTBE use, while maintaining air
quality. On August 4, 1999, the U.S. Senate passed a resolution calling for a
phase out of MTBE. While this resolution has no binding legislative effect,
there can be no assurance that future Congressional action will not result in a
ban or other restrictions on MTBE use. Ongoing debate regarding this issue is
continuing at all levels of federal and state government.

Any phase-out of or prohibition against the use of MTBE in California (in
which a significant amount of MTBE is consumed), in other states, or nationally
could result in a significant reduction in demand for our MTBE. In that event,
we believe we will be able to modify our PO production process to make
alternative co-products other than MTBE, though the necessary modifications may
require significant capital expenditures. There can be no assurance, however,
that we would not incur a material loss in revenues or material costs or
expenditures in the event of a widespread decrease or cessation of use of MTBE.

In addition to recent legislative challenges to the use of MTBE, various
citizens groups and municipalities have filed lawsuits against petroleum
refiners and trade associations involved with petroleum and oxygenated fuels,
including other manufacturers of MTBE. The plaintiffs in these lawsuits seek,
among other things, damages from the defendants for the costs of cleaning up
contamination. Neither we nor any of our affiliates have been named in any of
these lawsuits; however, we cannot give any assurance that we will not be named
in any future litigation or that such litigation will not have a material
adverse effect on our business, financial condition, results of operations or
cash flows.

We are controlled by a single beneficial owner.

Jon M. Huntsman, Chairman of the Board, Chief Executive Officer and a
Director of Huntsman Corporation, members of his immediate family and trusts
for the benefit of his family members own beneficially 100% of the common stock
of Huntsman Corporation, which with its affiliates indirectly

own 60% of our common equity interests. In addition, all of the members of our
Board of Managers are members of the Huntsman family. See "Management--Managers
and Executive Officers" and "Prospectus Summary--Management and Ownership". As
a result of these relationships, the Huntsman family collectively, and Jon M.
Huntsman individually, substantially controls our affairs.

As a result of Huntsman Corporation's and ICI's ownership interests,
conflicts of interest could arise with respect to transactions involving
business dealings between us and them, potential acquisitions of businesses or
properties, the issuance of additional securities, the payment of dividends by
us and other matters. See "Description of Notes--Certain Covenants--Limitations
on Transactions with Affiliates". In addition, some of our executive officers
serve as executive officers and directors of various Huntsman companies and of
ICI and its affiliates. See "Management" and "Certain Relationships and Related
Transactions".

Our business may be adversely affected by international operations and
fluctuations in currency exchange rates.

We conduct a significant portion of our business outside the United States.
Our operations outside the United States are subject to risks normally
associated with international operations. These risks include the need to
convert currencies which we may receive for our products into currencies
required to pay our debt, or into currencies in which we purchase raw materials
or pay for services, which could result in a gain or loss depending on
fluctuations in exchange rates. Other risks of international operations include
trade barriers, tariffs, exchange controls, national and regional labor
strikes, social and political risks, general economic risks, required
compliance with a variety of foreign laws, including tax laws and the
difficulty of enforcing agreements and collecting receivables through foreign
legal systems.

We rely on patents and confidentiality agreements to protect our intellectual
property.

Proprietary protection of our processes, apparatuses, and other technology
is important to our business. Consequently, we rely on judicial enforcement for
protection of our patents. While a presumption of validity exists with respect
to patents issued to us in the U.S., there can be no assurance that any of our
patents will not be challenged, invalidated, circumvented or rendered
unenforceable. Furthermore, there can be no assurance that any pending patent
application filed by us will result in an issued patent, or that if patents do
issue to us, that such patents will provide meaningful protection against
competitors or against competitive technologies.

We also rely upon unpatented proprietary know-how and continuing
technological innovation and other trade secrets to develop and maintain our
competitive position. While it is our policy to enter into confidentiality
agreements with our employees and third parties to protect our intellectual
property, there can be no assurances that our confidentiality agreements will
not be breached, that they will provide meaningful protection for our trade
secrets or proprietary know-how, or that adequate remedies will be available in
the event of an unauthorized use or disclosure of such trade secrets and know-
how. In addition, there can be no assurances that others will not obtain
knowledge of such trade secrets through independent development or other access
by legal means. The failure of our patents or confidentiality agreements to
protect our processes, apparatuses, technology, trade secrets or proprietary
know-how could have a material adverse effect on our business, financial
condition, results of operations or cash flows.

Year 2000 issues could adversely affect our business.

Our business operations are dependent upon a large number of business
support and manufacturing distributive control software and systems including a
reliance on software and systems of third parties. Many existing computer
software programs and systems could fail or create

erroneous results by or at the Year 2000. A degree of risk exists that we will
not adequately identify and remedy each Year 2000 problem that exists in our
business. We are also dependent on a limited number of internal professionals
with critical knowledge and expertise required for remedying Year 2000 issues.
Although we believe that our key management information systems and
manufacturing controls are or will be Year 2000 ready, unanticipated Year 2000
problems with respect to our internal software and systems or that of a third
party may arise which, depending on the nature and magnitude of the problem,
could adversely affect our business, financial condition, results of operations
or cash flows. In addition to the computer software and systems that we use
directly, our operations also depend upon the performance of computer software
and systems used by our significant service providers including services such
as utilities, telecommunications or banking services. These problems could
adversely affect our business. We are unable at this time to assess the
possible impact on our business of Year 2000 problems involving any third
party. However, where we consider the risks are high we have been developing
contingency plans to minimize these impacts.

There is no established market for the notes.

Although the notes are listed on the Luxembourg Stock Exchange, the notes
constitute a new issue of securities for which there is no established trading
market. The initial purchasers have advised us that they intend to make a
market in the notes, but they are not obligated to do so and may discontinue
market-making activities any time. Accordingly, we cannot give any assurance as
to (1) the likelihood that an active market for the notes will develop, (2) the
liquidity of any such market, (3) the ability of holders to sell their notes or
(4) the prices that holders may obtain for their notes upon any sale. Future
trading prices for the notes will depend on many factors, including, among
others, our operating results, the market for similar securities and interest
rates. Historically, the market for non-investment grade debt has been subject
to disruptions that have caused substantial volatility in the prices of
securities similar to the notes. We cannot guarantee that the market for the
notes will not be subject to similar disruptions or that any such disruptions
will not have an adverse effect on the value or marketability of the notes.

The notes and the guarantees may be void, avoided or subordinated under laws
governing fraudulent transfers, insolvency and financial assistance.

In connection with our transactions with ICI and Huntsman Specialty and
with BP Chemicals, we have incurred substantial debt, including debt under our
senior secured credit facilities and the notes. Various fraudulent conveyance
laws enacted for the protection of creditors may apply to our issuance of the
notes and the guarantors' issuance of the guarantees. To the extent that a
court were to find that (1) the notes were issued or a guarantee was incurred
with actual intent to hinder, delay or defraud any present or future creditor
or (2) we or a guarantor did not receive fair consideration or reasonably
equivalent value for issuing the notes or guarantee and we or a guarantor (A)
was insolvent, (B) was rendered insolvent by reason of the issuance of the
notes or a guarantee, (C) was engaged or about to engage in a business or
transaction for which our remaining assets or those of a guarantor constituted
unreasonably small capital to carry on its business or (D) intended to incur,
or believed that it would incur, debts beyond its ability to pay those debts as
they matured, the court could avoid the notes or the guarantee or subordinate
the notes or the guarantee in favor of our or the guarantor's creditors. To the
extent that the notes or a guarantee were avoided as a fraudulent conveyance or
held unenforceable for any other reason, claims of holders of the notes against
us or a guarantor would be adversely affected, the notes would be effectively
subordinated to all obligations of our creditors or the creditors of the
guarantor, and the other creditors would be entitled to be paid in full before
any payment could be made on the notes.

If insolvency proceedings are commenced by or against Tioxide Group, our
English subsidiary that is a guarantor of the notes, the presiding court may
apply English insolvency laws. Under English insolvency laws, the liquidator or
administrator of Tioxide Group may, among other things, apply to the court to
rescind the guarantee if Tioxide Group received consideration of significantly
less value than the benefit of its guarantee provides to us, Tioxide Group was
insolvent (as defined in the English Insolvency Act 1986) at the time of, or
immediately after, entering into the guarantee and Tioxide Group enters into a
formal insolvency process before the second anniversary of the sale of the
notes.

Under applicable provisions of English company law, the giving of the
guarantee by Tioxide Group constitutes "financial assistance". Accordingly, if
the guarantee has reduced the net assets of Tioxide Group, the guarantee will
be void. In the event that a guarantee is void, avoided or subordinated, we can
give no assurance that after providing for all prior claims there would be
sufficient assets remaining to satisfy the claims of holders of the notes.

THE EXCHANGE OFFER

Purpose of the Exchange Offer

When we sold the outstanding notes on June 30, 1999, we entered into an
exchange and registration rights agreement with the initial purchasers of those
notes. Under the exchange and registration rights agreement, we agreed to file
the registration statement of which this prospectus forms a part regarding the
exchange of the outstanding notes for notes which are registered under the
Securities Act of 1933. We also agreed to use our reasonable best efforts to
cause the registration statement to become effective with the SEC, and to
conduct this exchange offer after the registration statement is declared
effective. We will use our best efforts to keep this registration statement
effective until the exchange offer is completed. The exchange and registration
rights agreement provides that we will be required to pay liquidated damages to
the holders of the outstanding notes if:

. the registration statement is not declared effective by January 27,
2000; or

. the exchange offer has not been consummated within 45 days after the
effective date of the registration statement.

A copy of the exchange and registration rights agreement is filed as an
exhibit to the registration statement to which this prospectus is a part.

Terms of the Exchange Offer

This prospectus and the accompanying letter of transmittal together
constitute the exchange offer. Upon the terms and subject to the conditions set
forth in this prospectus and in the letter of transmittal, we will accept for
exchange outstanding notes which are properly tendered on or before the
expiration date and are not withdrawn as permitted below. The expiration date
for this exchange offer is p.m., New York City time, on , 1999, or such
later date and time to which we, in our sole discretion, extend the exchange
offer.

The form and terms of the notes being issued in the exchange offer are the
same as the form and terms of the outstanding notes, except that:

. the notes being issued in the exchange offer will have been registered
under the Securities Act;

. the notes issued in the exchange offer will not bear the restrictive
legends restricting their transfer under the Securities Act; and

. the notes being issued in the exchange offer will not contain the
registration rights and liquidated damages provisions contained in the
outstanding notes.

Notes tendered in the exchange offer must be in denominations of the
principal amount of $1,000 or (Euro)1,000 and any integral multiple thereof.

We expressly reserve the right, in our sole discretion:

. to extend the expiration date;

. to delay accepting any outstanding notes;

. if any of the conditions set forth below under "--Conditions to the
Exchange Offer" have not been satisfied, to terminate the exchange
offer and not accept any notes for exchange; and

. to amend the exchange offer in any manner.

We will give oral or written notice of any extension, delay, non-
acceptance, termination or amendment as promptly as practicable by a public
announcement, and in the case of an extension, no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
expiration date.

During an extension, all outstanding notes previously tendered will remain
subject to the exchange offer and may be accepted for exchange by us. Any
outstanding notes not accepted for exchange for any reason will be returned
without cost to the holder that tendered them as promptly as practicable after
the expiration or termination of the exchange offer.

How to Tender Notes for Exchange

When the holder of outstanding notes tenders, and we accept, notes for
exchange, a binding agreement between us and the tendering holder is created,
subject to the terms and conditions set forth in this prospectus and the
accompanying letter of transmittal. Except as set forth below, a holder of
outstanding notes who wishes to tender notes for exchange must, on or prior to
the expiration date:

(1) transmit a properly completed and duly executed letter of transmittal,
including all other documents required by such letter of transmittal,
to Bank One, N.A. (the "exchange agent") at the address set forth
below under the heading "--The Exchange Agent"; or

(2) if notes are tendered pursuant to the book-entry procedures set forth
below, the tendering holder must transmit an agent's message to the
exchange agent at the address set forth below under the heading "--The
Exchange Agent."

In addition, either:

(1) the exchange agent must receive the certificates for the outstanding
notes and the letter of transmittal;

(2) the exchange agent must receive, prior to the expiration date, a
timely confirmation of the book-entry transfer of the notes being
tendered into the exchange agent's account at the Depository Trust
Company ("DTC"), Euroclear or Cedelbank, as applicable, in each case
along with the letter of transmittal or an agent's message; or

(3) the holder must comply with the guaranteed delivery procedures
described below.

The term "agent's message" means a message, transmitted to DTC, Euroclear
or Cedelbank, as applicable, and received by the exchange agent and forming a
part of a book-entry transfer (a "book-entry confirmation"), which states that
DTC, Euroclear or Cedelbank, as applicable, has received an express
acknowledgment that the tendering holder agrees to be bound by the letter of
transmittal and that we may enforce the letter of transmittal against such
holder.

The method of delivery of the outstanding notes, the letters of transmittal
and all other required documents is at the election and risk of the holders. If
such delivery is by mail, we recommend registered mail, properly insured, with
return receipt requested. In all cases, you should allow sufficient time to
assure timely delivery. No letters of transmittal or notes should be sent
directly to us.

Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the notes surrendered for exchange are
tendered:

(1) by a holder of outstanding notes who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal; or

(2) for the account of an eligible institution.

An "eligible institution" is a firm which is a member of a registered
national securities exchange or a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.

If signatures on a letter of transmittal or notice of withdrawal are
required to be guaranteed, the guarantor must be an eligible institution. If
notes are registered in the name of a person other than the signer of the
letter of transmittal, the notes surrendered for exchange must be endorsed by,
or accompanied by a written instrument or instruments of transfer or exchange,
in satisfactory form as determined by us in our sole discretion, duly executed
by the registered holder with the holder's signature guaranteed by an eligible
institution.

We will determine all questions as to the validity, form, eligibility
(including time of receipt) and acceptance of notes tendered for exchange in
our sole discretion. Our determination will be final and binding. We reserve
the absolute right to:

(1) reject any and all tenders of any note improperly tendered;

(2) refuse to accept any note if, in our judgment or the judgment of our
counsel, acceptance of the note may be deemed unlawful; and

(3) waive any defects or irregularities or conditions of the exchange
offer as to any particular note either before or after the expiration
date, including the right to waive the ineligibility of any holder who
seeks to tender notes in the exchange offer.

Our interpretation of the terms and conditions of the exchange offer as to
any particular notes either before or after the expiration date, including the
letter of transmittal and the instructions to it, will be final and binding on
all parties. Holders must cure any defects and irregularities in connection
with tenders of notes for exchange within such reasonable period of time as we
will determine, unless we waive such defects or irregularities. Neither we, the
exchange agent nor any other person shall be under any duty to give
notification of any defect or irregularity with respect to any tender of notes
for exchange, nor shall any of us incur any liability for failure to give such
notification.

If a person or persons other than the registered holder or holders of the
outstanding notes tendered for exchange signs the letter of transmittal, the
tendered notes must be endorsed or accompanied by appropriate powers of
attorney, in either case signed exactly as the name or names of the registered
holder or holders that appear on the outstanding notes.

If trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity sign the letter of transmittal or any notes or any power of attorney,
such persons should so indicate when signing, and you must submit proper
evidence satisfactory to us of such person's authority to so act unless we
waive this requirement.

By tendering, each holder will represent to us that, among other things,
that the person acquiring notes in the exchange offer is obtaining them in the
ordinary course of its business, whether or not such person is the holder, and
that neither the holder nor such other person has any arrangement or
understanding with any person to participate in the distribution of the notes
issued in the exchange offer. If any holder or any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of our company,
or is engaged in or intends to engage in or has an arrangement or understanding
with any person to participate in a distribution of such notes to be acquired
in the exchange offer, such holder or any such other person:

(1) may not rely on the applicable interpretations of the staff of the
SEC; and

(2) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any resale transaction.

Each broker-dealer who acquired its outstanding notes as a result of
market-making activities or other trading activities and thereafter receives
notes issued for its own account in the exchange offer, must acknowledge that
it will deliver a prospectus in connection with any resale of such notes issued
in the exchange offer. The letter of transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. See "Plan of Distribution" for a discussion of the exchange and
resale obligations of broker-dealers in connection with the exchange offer.

Acceptance of Outstanding Notes for Exchange; Delivery of Notes Issued in the
Exchange Offer

Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration date, all outstanding notes
properly tendered and will issue notes registered under the Securities Act. For
purposes of the exchange offer, we shall be deemed to have accepted properly
tendered outstanding notes for exchange when, as and if we have given oral or
written notice to the exchange agent, with written confirmation of any oral
notice to be given promptly thereafter. See "--Conditions to the Exchange
Offer" for a discussion of the conditions that must be satisfied before we
accept any notes for exchange.

For each outstanding note accepted for exchange, the holder will receive a
note registered under the Securities Act having a principal amount equal to,
and in the denomination of, that of the surrendered outstanding note.
Accordingly, registered holders of notes issued in the exchange offer on the
relevant record date for the first interest payment date following the
consummation of the exchange offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid on
the outstanding notes, from June 30, 1999. Outstanding notes that we accept for
exchange will cease to accrue interest from and after the date of consummation
of the exchange offer. Under the exchange and registration rights agreement, we
may be required to make additional payments in the form of liquidated damages
to the holders of the outstanding notes under circumstances relating to the
timing of the exchange offer.

In all cases, we will issue notes in the exchange offer for outstanding
notes that are accepted for exchange only after the exchange agent timely
receives:

(1) certificates for such outstanding notes or a timely book-entry
confirmation of such outstanding notes into the exchange agent's
account at DTC, Euroclear or Cedelbank, as applicable;

(2) a properly completed and duly executed letter of transmittal or an
agent's message; and

(3) all other required documents.

If for any reason set forth in the terms and conditions of the exchange
offer we do not accept any tendered outstanding notes, or if a holder submits
outstanding notes for a greater principal amount than the holder desires to
exchange, we will return such unaccepted or non-exchanged notes without cost to
the tendering holder. In the case of notes tendered by book-entry transfer into
the exchange agent's account at DTC, Euroclear or Cedelbank, as applicable,
such non-exchanged notes will be credited to an account maintained with DTC,
Euroclear or Cedelbank, as applicable. We will return the notes or have them
credited to DTC, Euroclear or Cedelbank account, as applicable, as promptly as
practicable after the expiration or termination of the exchange offer.

Book Entry Transfers

The exchange agent will make a request to establish an account at DTC with
respect to outstanding notes denominated in dollars and at Euroclear or
Cedelbank with respect to outstanding

notes denominated in euros for purposes of the exchange offer within two (2)
business days after the date of this prospectus. Any financial institution that
is a participant in DTC's, Euroclear's or Cedelbank's systems, as applicable,
must make book-entry delivery of outstanding notes denominated in dollars by
causing DTC to transfer those outstanding notes denominated in dollars into the
exchange agent's account at DTC in accordance with DTC's procedures for
transfer and must make book-entry delivery of outstanding notes denominated in
euros by causing Euroclear or Cedelbank to transfer those outstanding notes
denominated in euros into the exchange agent's account at Euroclear or
Cedelbank in accordance with Euroclear's or Cedelbank's procedures, as
applicable. Such participant should transmit its acceptance to DTC, Euroclear
or Cedelbank, as applicable, on or prior to the expiration date or comply with
the guaranteed delivery procedures described below. DTC, Euroclear or
Cedelbank, as applicable, will verify such acceptance, execute a book-entry
transfer of the tendered outstanding notes into the exchange agent's account at
DTC, Euroclear or Cedelbank, as applicable, and then send to the exchange agent
confirmation of such book-entry transfer. The confirmation of such book-entry
transfer will include an agent's message confirming that DTC, Euroclear or
Cedelbank, as applicable, has received an express acknowledgment from such
participant that such participant has received and agrees to be bound by the
letter of transmittal and that we may enforce the letter of transmittal against
such participant. Delivery of notes issued in the exchange offer may be
effected through book-entry transfer at DTC, Euroclear or Cedelbank, as
applicable. However, the letter of transmittal or facsimile thereof or an
agent's message, with any required signature guarantees and any other required
documents, must:

(1) be transmitted to and received by the exchange agent at the address
set forth below under "--Exchange Agent" on or prior to the expiration
date; or

(2) comply with the guaranteed delivery procedures described below.

Guaranteed Delivery Procedures

If a holder of outstanding notes desires to tender such notes and the
holder's notes are not immediately available, or time will not permit such
holder's notes or other required documents to reach the exchange agent before
the expiration date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if:

(1) the holder tenders the notes through an eligible institution;

(2) prior to the expiration date, the exchange agent receives from such
eligible institution a properly completed and duly executed notice of
guaranteed delivery, substantially in the form we have provided, by
telegram, telex, facsimile transmission, mail or hand delivery,
setting forth the name and address of the holder of the notes being
tendered and the amount of the notes being tendered. The notice of
guaranteed delivery shall state that the tender is being made and
guarantee that within three (3) New York Stock Exchange trading days
after the date of execution of the notice of guaranteed delivery, the
certificates for all physically tendered notes, in proper form for
transfer, or a book-entry confirmation, as the case may be, together
with a properly completed and duly executed letter of transmittal or
agent's message with any required signature guarantees and any other
documents required by the letter of transmittal will be deposited by
the eligible institution with the exchange agent; and

(3) the exchange agent receives the certificates for all physically
tendered outstanding notes, in proper form for transfer, or a book-
entry confirmation, as the case may be, together with a properly
completed and duly executed letter of transmittal or agent's message
with any required signature guarantees and any other documents
required by the letter of transmittal, within three (3) New York Stock
Exchange trading days after the date of execution of the notice of
guaranteed delivery.

Withdrawal Rights

You may withdraw tenders of your outstanding notes at any time prior to
p.m., New York City time, on the expiration date.

For a withdrawal to be effective, you must send a written notice of
withdrawal to the exchange agent at one of the addresses set forth below under
"--Exchange Agent." Any such notice of withdrawal must:

(1) specify the name of the person having tendered the outstanding notes
to be withdrawn;

(2) identify the outstanding notes to be withdrawn, including the
principal amount of such outstanding notes; and

(3) where certificates for outstanding notes are transmitted, specify the
name in which outstanding notes are registered, if different from that
of the withdrawing holder.

If certificates for outstanding notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of such
certificates the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and signed notice of withdrawal with
signatures guaranteed by an eligible institution unless such holder is an
eligible institution. If notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at DTC, Euroclear or Cedelbank, as applicable,
to be credited with the withdrawn notes and otherwise comply with the
procedures of such facility. We will determine all questions as to the
validity, form and eligibility (including time of receipt) of such notices and
our determination will be final and binding on all parties. Any tendered notes
so withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the exchange offer. Any notes which have been tendered for exchange
but which are not exchanged for any reason will be returned to the holder
thereof without cost to such holder. In the case of notes tendered by book-
entry transfer into the exchange agent's account at DTC, Euroclear or
Cedelbank, the notes withdrawn will be credited to an account maintained with
DTC, Euroclear or Cedelbank, as applicable, for the outstanding notes. The
notes will be returned or credited to DTC, Euroclear or Cedelbank account, as
applicable, as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. Properly withdrawn notes may be re-tendered
by following one of the procedures described under "--How to Tender Notes for
Exchange" above at anytime on or prior to p.m., New York City time, on the
expiration date.

Conditions to the Exchange Offer

We are not required to accept for exchange, or to issue notes in the
exchange offer for any outstanding notes. We may terminate or amend the
exchange offer, if at any time before the acceptance of such outstanding notes
for exchange:

(1) any federal law, statute, rule or regulation shall have been adopted
or enacted which, in our judgment, would reasonably be expected to
impair our ability to proceed with the exchange offer;

(2) any stop order shall be threatened or in effect with respect to the
registration statement of which this prospectus constitutes a part or
the qualification of the indenture under the Trust Indenture Act of
1939, as amended;

(3) there shall occur a change in the current interpretation by staff of
the SEC which permits the notes issued in the exchange offer in
exchange for the outstanding notes to be offered for resale, resold
and otherwise transferred by such holders, other than broker-dealers
and any such holder which is an "affiliate" of our company within the
meaning of Rule 405 under the Securities Act, without compliance with
the registration and prospectus delivery

provisions of the Securities Act, provided that such notes acquired in
the exchange offer are acquired in the ordinary course of such holder's
business and such holder has no arrangement or understanding with any
person to participate in the distribution of such notes issued in the
exchange offer;

(4) there has occurred any general suspension of or general limitation on
prices for, or trading in, securities on any national exchange or in
the over-the-counter market;

(5) any governmental agency creates limits that adversely affect our
ability to complete the exchange offer;

(6) there shall occur any declaration of war, armed hostilities or other
similar international calamity directly or indirectly involving the
United States, or the worsening of any such condition that existed at
the time that we commence the exchange offer;

(7) there shall have occurred a change (or a development involving a
prospective change) in our and our subsidiaries' businesses,
properties, assets, liabilities, financial condition, operations,
results of operations taken as a whole, that is or may be adverse to
us; or

(8) we shall have become aware of facts that, in our reasonable judgment,
have or may have adverse significance with respect to the value of the
outstanding notes or the notes to be issued in the exchange offer.

The preceding conditions are for our sole benefit and we may assert them
regardless of the circumstances giving rise to any such condition. We may waive
the preceding conditions in whole or in part at any time and from time to time
in our sole discretion. If we do so, the exchange offer will remain open for at
least three (3) business days following any waiver of the preceding conditions.
Our failure at any time to exercise the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which we may assert at any time and from time to time.

The Exchange Agent

Bank One, N.A. has been appointed as our exchange agent for the exchange
offer. All executed letters of transmittal should be directed to our exchange
agent at the address set forth below. Questions and requests for assistance,
requests for additional copies of this prospectus or of the letter of
transmittal and requests for notices of guaranteed delivery should be directed
to the exchange agent addressed as follows:

Main Delivery To:
Bank One, N.A.

By hand delivery or overnight
courier: By mail:

Bank One Trust Company, NA Bank One Trust Company, NA
Corporate Trust Operations, Corporate Trust Operations
OH 10184 P.O. Box 710184
235 West Schrock Rd. Columbus, OH 43271-0184
Westerville, OH 43081 Attention: Lora Marsch--
Attention: Lora Marsch-- Confidential
Confidential

By facsimile transmission:
(for eligible institutions only)

614-248-9987

Confirm by Telephone:

800-346-5153

Delivery of the letter of transmittal to an address other than as set forth
above or transmission of such letter of transmittal via facsimile other than as
set forth above does not constitute a valid delivery of such letter of
transmittal.

Fees and Expenses

We will not make any payment to brokers, dealers, or others soliciting
acceptance of the exchange offer except for reimbursement of mailing expenses.

The estimated cash expenses to be incurred in connection with the exchange
offer will be paid by us and are estimated in the aggregate to be approximately
$ .

Transfer Taxes

Holders who tender their outstanding notes for exchange will not be
obligated to pay any transfer taxes in connection with the exchange. If,
however, notes issued in the exchange offer are to be delivered to, or are to
be issued in the name of, any person other than the holder of the notes
tendered, or if a transfer tax is imposed for any reason other than the
exchange of outstanding notes in connection with the exchange offer, then the
holder must pay any such transfer taxes, whether imposed on the registered
holder or on any other person. If satisfactory evidence of payment of, or
exemption from, such taxes is not submitted with the letter of transmittal, the
amount of such transfer taxes will be billed directly to the tendering holder.

Consequences of Failure to Exchange Outstanding Notes

Holders who desire to tender their outstanding notes in exchange for notes
registered under the Securities Act should allow sufficient time to ensure
timely delivery. Neither the exchange agent nor our company is under any duty
to give notification of defects or irregularities with respect to the tenders
of notes for exchange.

Outstanding notes that are not tendered or are tendered but not accepted
will, following the consummation of the exchange offer, continue to be subject
to the provisions in the indenture regarding the transfer and exchange of the
outstanding notes and the existing restrictions on transfer set forth in the
legend on the outstanding notes and in the offering circular dated June 22,
1999, relating to the outstanding notes. Except in limited circumstances with
respect to specific types of holders of outstanding notes, we will have no
further obligation to provide for the registration under the Securities Act of
such outstanding notes. In general, outstanding notes, unless registered under
the Securities Act, may not be offered or sold except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. We do not currently anticipate that we will take any
action to register the outstanding notes under the Securities Act or under any
state securities laws.

Upon completion of the exchange offer, holders of the outstanding notes
will not be entitled to any further registration rights under the exchange and
registration rights agreement, except under limited circumstances.

Holders of the notes issued in the exchange offer and any outstanding notes
which remain outstanding after consummation of the exchange offer will vote
together as a single class for purposes of determining whether holders of the
requisite percentage of the class have taken certain actions or exercised
certain rights under the indenture.

Consequences of Exchanging Outstanding Notes

Based on interpretations of the staff of the SEC, as set forth in no-action
letters to third parties, we believe that the notes issued in the exchange
offer may be offered for resale, resold or otherwise transferred by holders of
such notes, other than by any holder which is an "affiliate" of our company
within the meaning of Rule 405 under the Securities Act. Such notes may be
offered for resale, resold or otherwise transferred without compliance with the
registration and prospectus delivery provisions of the Securities Act, if:

(1) such notes issued in the exchange offer are acquired in the ordinary
course of such holder's business; and

(2) such holder, other than broker-dealers, has no arrangement or
understanding with any person to participate in the distribution of
such notes issued in the exchange offer.

However, the SEC has not considered the exchange offer in the context of a
no-action letter and we cannot guarantee that the staff of the SEC would make a
similar determination with respect to the exchange offer as in such other
circumstances.

Each holder, other than a broker-dealer, must furnish a written
representation, at our request, that:

(1) it is not an affiliate of ours;

(2) it is not engaged in, and does not intend to engage in, a distribution
of the notes issued in the exchange offer and has no arrangement or
understanding to participate in a distribution of notes issued in the
exchange offer;

(3) it is acquiring the notes issued in the exchange offer in the ordinary
course of its business; and

(4) it is not acting on behalf of a person who could not make
representations (1)-(3).

Each broker-dealer that receives notes issued in the exchange offer for its
own account in exchange for outstanding notes must acknowledge that such
outstanding notes were acquired by such broker-dealer as a result of market-
making or other trading activities and that it will deliver a prospectus in
connection with any resale of such notes issued in the exchange offer. See
"Plan of Distribution" for a discussion of the exchange and resale obligations
of broker-dealers in connection with the exchange offer.

In addition, to comply with state securities laws of certain jurisdictions,
the notes issued in the exchange offer may not be offered or sold in any state
unless they have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and complied with by
the holders selling the notes. We have agreed in the exchange and registration
rights agreement that, prior to any public offering of transfer restricted
securities, we will register or qualify the transfer restricted securities for
offer or sale under the securities laws of any jurisdiction requested by a
holder. Unless a holder requests, we currently do not intend to register or
qualify the sale of the notes issued in the exchange offer in any state where
an exemption from registration or qualification is required and not available.
"Transfer restricted securities" means each note until:

(1) the date on which such note has been exchanged by a person other than
a broker-dealer for a note in the exchange offer;

(2) following the exchange by a broker-dealer in the exchange offer of a
note for a note issued in the exchange offer, the date on which the
note issued in the exchange offer is sold to a purchaser who receives
from such broker-dealer on or prior to the date of such sale a copy of
this prospectus;

(3) the date on which such note has been effectively registered under the
Securities Act and disposed of in accordance with a shelf registration
statement that we file in accordance with the exchange and
registration rights agreement; or

(4) the date on which such note is distributed to the public in a
transaction under Rule 144 of the Securities Act.

THE TRANSACTION

Summary

At the close of business on June 30, 1999, we acquired assets and stock
representing ICI's polyurethane chemicals, selected petrochemicals (including
ICI's 80% interest in the Wilton olefins facility) and TiO\\2\\ businesses and
Huntsman Specialty Chemicals Corporation's PO business. In addition, at the
close of business on June 30, 1999, we also acquired the remaining 20%
ownership interest in the Wilton olefins facility from BP Chemicals Limited.

The chart below shows our company structure, together with common equity
ownership:
[Flow chart of Huntsman Corporation and affiliates]

Transaction Consideration

Initial Transaction Consideration

In exchange for transferring its business to us, Huntsman Specialty

. retained a 60% common equity interest in Huntsman ICI Holdings and

.received approximately $360 million in cash.

In exchange for transferring its businesses, ICI received

.a 30% common equity interest in Huntsman ICI Holdings,

. approximately $2 billion in cash that was paid in a combination of U.S.
dollars and euros and

. discount notes of Huntsman ICI Holdings with $508 million of accreted
value at issuance.

The obligations of the discount notes from Huntsman ICI Holdings are non-
recourse to us.

Huntsman ICI Holdings issued discount notes to ICI in two classes, senior
discount notes with $242.7 million of accreted value at issuance and
subordinated discount notes with $265.3 million of accreted value at issuance,
neither of which require cash interest payments. The senior discount notes
accrete interest at a rate of 13.375%. The subordinated discount notes accrete
interest at a rate of 8% for approximately the first four years following their
issuance and will be reset to accrete at a market rate thereafter. The
covenants in the indentures governing the discount notes are not more
restrictive on us than the covenants contained in the indenture governing the
notes. In addition, without the consent of Huntsman ICI Holdings, ICI has
agreed not to sell the subordinated discount notes prior to the reset of the
interest rate on those notes. Both the senior and the subordinated discount
notes mature on December 31, 2009.

With the consent of Huntsman ICI Holdings, on August 2, 1999, ICI sold the
senior discount notes of Huntsman ICI Holdings in a private transaction under
Rule 144A and Regulation S of the Securities Act. Huntsman ICI Holdings has
also agreed to register substantially similar notes under the Securities Act to
be exchanged for the outstanding senior discount notes. Huntsman ICI Holding's
registration obligations are substantially similar to our obligations to
register the notes offered in this prospectus, except that ICI has agreed to
pay the fees and expenses of Huntsman ICI Holdings incurred in connection with
its registration of those notes.

Adjustments to Consideration

Because ICI failed to transfer less than 3% of the assets comprising the
businesses that it was obligated to transfer to us at the closing of our
transaction with them, we reduced the cash payable to ICI by an agreed amount.
ICI is now under a continuing obligation to use its reasonable endeavors to
transfer those assets to us. Until the assets are so transferred, ICI will hold
the assets for our benefit and we will indemnify ICI for any losses it incurs
in respect of those assets during that time. When and if ICI transfers any of
the excluded assets to us, then we will pay ICI the amount by which the cash
payable to ICI at the closing was reduced with respect to such assets. However,
after June 30, 2001, at our option, we may either (1) require ICI to maintain
the existing arrangement and pay ICI the portion of the purchase price that we
withheld with respect to any such excluded assets that have not been
transferred to us or (2) terminate the arrangement and require ICI to refund
the remaining portion of the purchase price attributable to those assets.

In addition, ICI failed to transfer its interests in Nippon Polyurethane
Industry Co. Ltd. and Arabian Polyol Company Limited to us at the closing.
Under the terms of the contribution agreement, we did not receive a purchase
price adjustment with respect to those retained joint venture interests, and
ICI has agreed to hold the retained joint venture interests for our benefit and
will pay to us any dividends received from the joint ventures, and we will
indemnify ICI for any losses relating to any such retained joint venture
interest from the closing until such time as such interests are transferred to
us or we are refunded the fair market value of such interests. ICI is required
to pay us an amount equal to the fair market value as of the closing of our
transaction with ICI of either of these joint venture interests if either (1)
any of the other joint venture partners exercise a right of first refusal to
acquire that joint venture interest or (2) on or before June 30, 2001, ICI has
not obtained all consents necessary to transfer that interest to us. We do not
believe the failure by ICI to transfer these interests will have a material
adverse impact on our results of operations or cash flows.

Warranties and Indemnification

In connection with the transfer of the assets to us, both ICI and Huntsman
Specialty gave standard warranties to Huntsman ICI Holdings in connection with
the businesses being transferred, including warranties relating to
environmental liabilities and potential environmental liabilities; existence
of, or breaches in connection with, any material contracts and tax matters.

Each of ICI and Huntsman Specialty has agreed to indemnify Huntsman ICI
Holdings for certain specified matters and will be liable for damages in the
event of a breach of any of its warranties, other than nominal damages, as well
as for certain specific losses and claims. Generally, most claims for breaches
of warranty must be brought on or before June 30, 2001, while claims under
certain specific indemnities are subject to longer time limits. ICI generally
will not be liable for damages from any breach of warranty unless the aggregate
amount of damages in respect of its breaches of warranties exceeds (1)
(Pounds)10 million to the extent these breaches relate to events in existence
as of April 15, 1999 and (2) (Pounds)30 million to the extent these breaches
relate to events occurring between April 15, 1999 and June 30, 1999. Huntsman
Specialty will not generally be liable for damages from any breach of warranty
unless the aggregate amount of damages in respect of its breaches of warranties
exceeds $3.5 million. In addition to giving warranties, ICI and Huntsman
Specialty have also given specific indemnities to us in relation to liabilities
arising out of product liability claims for products manufactured before June
30, 1999, certain litigation existing prior to June 30, 1999, and certain
employee claims. ICI and Huntsman Specialty have also each given indemnities
with respect to certain environmental matters. In any event, neither ICI nor
Huntsman Specialty will be liable for any damages, whether arising from a
breach of warranty or under a specific indemnity that (with limited
exceptions), in the case of ICI, exceed (Pounds)650 million in the aggregate
and in the case of Huntsman Specialty exceed $225 million in the aggregate.

Description of Put and Call Options

Under the terms of the limited liability company agreement for Huntsman ICI
Holdings, Huntsman Specialty has the option to purchase, and ICI has the right
to require Huntsman Specialty to purchase, ICI's 30% interest in Huntsman ICI
Holdings between June 30, 2002 and June 30, 2003. The exercise price for each
of these put and call options will be based partially upon an agreed formula
and the parties' agreed value of our businesses or based upon a third party
valuation at the time of the exercise of a put or a call option. If the put or
call option is exercised and Huntsman Specialty does not purchase ICI's
interests in accordance with the terms of the put or call option, then ICI has
the right to sell its interest in Huntsman ICI Holdings in a public offering or
a private sale and, if the proceeds of the sale are less than the put or call
option exercise price, ICI has the right to require Huntsman Specialty to sell,
for the benefit of ICI, sufficient equity interests in Huntsman ICI Holdings
owned by Huntsman Specialty as are necessary to provide ICI with proceeds equal
to the shortfall.

Under the terms of an agreement between Huntsman Specialty and BT Capital
Investors, L.P., Chase Equity Associates, L.P. and The Goldman Sachs Group,
Inc., each of these institutional investors has the right to require Huntsman
Specialty to purchase its interest in Huntsman ICI Holdings contemporaneously
with any exercise of the Huntsman Specialty and ICI put and call arrangements
described above. In addition, each institutional investor has the right to
require Huntsman Specialty to purchase its equity interest in Huntsman ICI
Holdings at any time after June 30, 2004. Each institutional investor also has
an option to require Huntsman Specialty to purchase its equity interest in
Huntsman ICI Holdings following the occurrence of a change of control of
Huntsman ICI Holdings or Huntsman Corporation. Huntsman Specialty has the
option to purchase all outstanding interests owned by the institutional
investors at any time after June 30, 2006. The exercise price for each of these
put and call options will be the value of our business as agreed between
Huntsman Specialty and the institutional investors or as determined by a third
party at the

time of the exercise of the put or call option. If Huntsman Specialty, having
used commercially reasonable efforts, does not purchase such interests, the
selling institutional investor will have the right to require Huntsman ICI
Holdings to register such interests for resale under the Securities Act.

USE OF PROCEEDS

We will not receive any proceeds from the exchange offer. The net proceeds
from the sale of the notes to the initial purchasers was approximately $789
million, less fees and expenses. We used the net proceeds to fund a portion of
our transaction with ICI and Huntsman Specialty and related fees and expenses,
and for general corporate purposes. See "The Transaction".

CAPITALIZATION

The following table sets forth the actual capitalization of Huntsman
Specialty as of March 31, 1999 and for our company as of March 31, 1999 on a
pro forma basis to give effect to our transactions with ICI and Huntsman
Specialty and with BP Chemicals and related financing thereof, including the
offering of the notes. The information set forth below is unaudited and should
be read in conjunction with "Unaudited Pro Forma Financial Data" and audited
and unaudited financial statements of Huntsman Specialty and the related notes
included elsewhere in this prospectus. Except as set forth in the pro forma
column below, there has been no material change in the capital of our company
since March 31, 1999.

As of March 31, 1999
------------------------------
Actual Adjustments Pro Forma
------ ----------- ---------
(in millions)

Cash............................................. $ 10 $ (10)(a) $ --
====== ====== ======
Long-term debt:
Senior secured credit facilities............... $ 357 $1,328 (b) $1,685
The notes...................................... -- 807 (c) 807
Other long-term debt........................... 72 (61)(d) 11
------ ------ ------
Total long-term debt............................. 429 2,074 2,503
Mandatorily redeemable preferred stock........... 73 (73)(e) --
Equity(f)........................................ 35 1,012 (g) 1,047
------ ------ ------
Total capitalization............................. $537.0 $3,013 $3,550
====== ====== ======

- --------
(a) Reflects the net effect on cash of our transactions with ICI and Huntsman
Specialty and with BP Chemicals as follows:

Proceeds from the senior secured credit facilities................... $ 1,685
Proceeds from the sale of the notes.................................. 807
Cash contribution from Huntsman ICI Holdings of institutional
investors' equity................................................... 90
Cash contribution from Huntsman ICI Holdings from issuance of
discount notes...................................................... 508
Elimination of cash of Huntsman Specialty not included in our
transaction with ICI and Huntsman Specialty........................ (10)
Cash consideration paid to ICI and BP Chemicals...................... (1,250)
Repayment of intercompany debt to ICI................................ (1,398)
Cash consideration paid to Huntsman Specialty........................ (360)
Payment of estimated transaction fees and expenses................... (82)
-------
$ (10)
=======
(b) Reflects the sum of the following:
Borrowings under the senior secured credit facilities................ $ 1,685
Existing debt of Huntsman Specialty not included in our transaction
with ICI and Huntsman Specialty..................................... (357)
-------
$ 1,328
=======
(c) Reflects the proceeds from the sale of the notes.
(d) Reflects the sum of the following:
Other long-term debt of Huntsman Specialty not included in our
transaction with ICI and Huntsman Specialty........................ $ (72)
Other long-term debt of the ICI businesses transferred to us in our
transaction with ICI and Huntsman Specialty........................ 11
-------
$ (61)
=======

(e) Reflects the elimination of mandatorily redeemable preferred stock of
Huntsman Specialty not included in our transaction with ICI and Huntsman
Specialty.
(f) As of March 31, 1999, Huntsman Specialty had an authorized capitalization
of 1,000 shares of common stock at par value of $0.01 per share and 65,000
shares of preferred stock with a liquidation value of $1.00 per share. At
such date 1,000

shares of common stock and 65,000 shares of Series A Non-voting Cumulative
Redeemable stock with a liquidation value of $1.00 per share were issued and
outstanding. At June 30, 1999, our total authorized ownership interests
consisted of 1,000 units.
(g)Reflects the sum of the following:

Cash contribution from Huntsman ICI Holdings of institutional
investors' equity................................................... $ 90
Cash contribution from Huntsman ICI Holdings from issuance of
discount notes...................................................... 508
Distribution of cash to Huntsman Specialty........................... (360)
Distribution of cash to ICI.......................................... (250)
Contribution of U.S. polyurethane chemicals business by ICI.......... 520
Elimination of assets, liabilities and retained earnings of Huntsman
Specialty not included in our transaction with ICI and Huntsman
Specialty........................................................... 504
------
$1,012
======

UNAUDITED PRO FORMA
FINANCIAL DATA

The unaudited pro forma financial data of our company set forth below gives
effect to our transactions with ICI and Huntsman Specialty and with BP
Chemicals and the related financing thereof, including the offering of the
notes. The unaudited pro forma condensed statement of operations data for the
year ended December 31, 1998 and the three months ended March 31, 1999 gives
effect to our transactions with ICI and Huntsman Specialty and with BP
Chemicals at the close of business on June 30, 1999 as if they had occurred on
January 1, 1998. The unaudited pro forma condensed balance sheet data as of
March 31, 1999 gives effect to our transactions with ICI and Huntsman Specialty
and with BP Chemicals as if they had occurred on such date. The unaudited pro
forma financial data does not purport to be indicative of the combined
financial position or results of operations of future periods or indicative of
results that would have occurred had our transactions with ICI and Huntsman
Specialty and with BP Chemicals referred to above been consummated on the dates
indicated. The pro forma and other adjustments, as described in the
accompanying notes to the unaudited pro forma condensed balance sheet and
statements of operations, are based on available information and certain
assumptions that management believes are reasonable. You should read the
unaudited pro forma financial data in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the audited
and unaudited financial statements of Huntsman Specialty and the audited and
unaudited combined financial statements of the polyurethane chemicals, selected
petrochemicals and TiO\\2\\ businesses of ICI, included elsewhere in this
prospectus.

UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF MARCH 31, 1999

ICI Businesses Combined Pro Forma
------------------------------------------- Huntsman Huntsman ICI Huntsman ICI
U.S. GAAP Specialty Chemicals Pro Forma Chemicals
(U.K. GAAP) Adjustments(a) (U.S. GAAP)(a) (U.S. GAAP) Adjustments(b) (U.S. GAAP) Adjustments (U.S. GAAP)
------------- -------------- -------------- ----------- -------------- ------------ ----------- ------------
(in millions)

Current assets:
Cash and cash
equivalents.... (Pounds) 35 $ 57 $ 10 $ (67) $ -- $ -- (c) $ --
Accounts
receivable..... 248 400 48 448 448
Due from
affiliates..... 27 44 5 49 49
Other
receivables.... 33 53 -- (11) 42 42
Inventories..... 256 413 23 436 20 (d) 456
------------- ---------- ------ ---- ----- ------ ------- ------
Total current
assets......... 599 -- 967 86 (78) 975 20 995
------------- ---------- ------ ---- ----- ------ ------- ------
Plant and
equipment, net.. 1,051 (Pounds)69 1,808 381 2,189 782 (d) 2,971
Investments in
unconsolidated
affiliates...... 6 10 -- 10 10
Intangible
assets.......... -- 30 48 116 164 74 (d) 238
------------- ---------- ------ ---- ----- ------ ------- ------
Total assets..... (Pounds)1,656 (Pounds)99 $2,833 $583 $ (78) $3,338 $ 876 $4,214
============= ========== ====== ==== ===== ====== ======= ======
Current
liabilities:
Short-term
borrowings and
current portion
of long-term
debt........... (Pounds) 13 $ 21 $ -- $ (21) $ -- $ --
Accounts
payable........ 190 307 15 322 322
Accrued
liabilities.... 143 (Pounds)23 268 11 (84) 195 $ 25 (d) 220
Due to
affiliates..... 25 40 11 51 51
Intercompany
debt........... 866 1,398 -- 1,398 (1,398)(e) --
Deferred income
taxes.......... -- -- 5 (5) -- --
------------- ---------- ------ ---- ----- ------ ------- ------
Total current
liabilities.... 1,237 23 2,034 42 (110) 1,966 (1,373) 593
------------- ---------- ------ ---- ----- ------ ------- ------
Long-term debt:
Long-term debt.. 7 11 429 (429) 11 11
Senior secured
credit
facilities..... -- -- -- -- 1,685 (f) 1,685
The notes....... -- -- -- -- 807 (f) 807
------------- ---------- ------ ---- ----- ------ ------- ------
Total long-term
debt........... 7 -- 11 429 (429) 11 2,492 2,503
------------- ---------- ------ ---- ----- ------ ------- ------
Deferred income
and other
liabilities.... 19 31 -- 31 31
Deferred income
taxes.......... 43 68 179 4 (183) -- 40 (g) 40
Mandatorily
redeemable
preferred
stock........... -- -- 73 (73) -- --
Equity........... 350 8 578 35 717 1,330 (283)(h) 1,047
------------- ---------- ------ ---- ----- ------ ------- ------
Total liabilities
and equity...... (Pounds)1,656 (Pounds)99 $2,833 $583 $ (78) $3,338 $ 876 $4,214
============= ========== ====== ==== ===== ====== ======= ======

(See footnotes on next page)

(b) To eliminate the following assets and liabilities of Huntsman Specialty
and of the businesses transferred to us by ICI that were not included in
our transaction with ICI and Huntsman Specialty:

ICI
Huntsman Transferred
Specialty Businesses Total
--------- ----------- -----
(in millions)

Cash and cash equivalents.................... $(10) $(57) $(67)
Other receivables............................ -- (11) (11)
Short-term borrowings and current portion of
long-term debt.............................. -- 21 21
Accrued liabilities.......................... 3 81 84
Deferred income taxes--current............... 5 -- 5
Long-term debt............................... 429 -- 429
Deferred income taxes--long-term............. 4 179 183
Mandatorily redeemable preferred stock....... 73 -- 73
---- ---- ----
$504 $213 $717
==== ==== ====

(c) To reflect the net effect on cash of our transactions with ICI and
Huntsman Specialty and with BP Chemicals as follows:

Proceeds from the senior secured credit facilities.............. $ 1,685
Proceeds from the sale of the notes (euro to dollar exchange
rate of 1.0336)................................................ 807
Cash contribution from Huntsman ICI Holdings of institutional
investors' equity.............................................. 90
Cash contribution from Huntsman ICI Holdings from issuance of
discount notes................................................. 508
Cash consideration paid to ICI and BP Chemicals................. (1,250)
Repayment of intercompany debt to ICI........................... (1,398)
Cash consideration paid to Huntsman Specialty................... (360)
Payment of estimated transaction fees and expenses.............. (82)
-------
$ 0
=======

(d) To adjust the assets and liabilities of the businesses transferred to us
by ICI and BP Chemicals to the fair market value based upon management
estimates in accordance with the purchase method of accounting.

Inventories..................................................... $ 20
Property and equipment.......................................... 782
Intangible assets............................................... 74
Accrued liabilities............................................. (25)
-------
$ 851
=======

(e) To reflect the repayment of intercompany debt to ICI.

(f) To record the debt resulting from our transactions with ICI and Huntsman
Specialty and with BP Chemicals.

(g) To record the estimated deferred taxes resulting from our transactions
with ICI and Huntsman Specialty and with BP Chemicals.

(h) To record the impact on equity as a result of our transactions with ICI
and Huntsman Specialty and with BP Chemicals:

Cash contribution from Huntsman ICI Holdings of institutional
investors' equity.............................................. $ 90
Cash contribution from Huntsman ICI Holdings from issuance of
discount notes................................................. 508
Distribution of cash to ICI..................................... (250)
Contribution of U.S. polyurethane chemicals business............ 520
Cash consideration paid to Huntsman Specialty................... (360)
Elimination of equity of ICI businesses prior to our transaction
with ICI and Huntsman Specialty................................ (791)
-------
$ (283)
=======

UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998

ICI Businesses Combined Pro Forma
-------------------------------------------- Huntsman Huntsman ICI Huntsman ICI
U.S. GAAP Specialty Chemicals Pro Forma Chemicals
(U.K. GAAP) Adjustments(a) (U.S. GAAP)(a) (U.S. GAAP) Adjustments(b) (U.S. GAAP) Adjustments (U.S. GAAP)
------------- -------------- -------------- ----------- -------------- ------------ ----------- ------------
(in millions)

Sales--net....... (Pounds)2,011 $3,332 $339 $3,671 $ $3,671
Cost of sales.... 1,687 (Pounds) 12 2,815 277 $(19)(b) 3,073 31 (d) 3,104
------------- ----------- ------ ---- ---- ------ ----- ------
Gross profit.... 324 12 517 62 19 598 (31) 567
Operating
expenses........ 211 (3) 345 8 353 353
------------- ----------- ------ ---- ---- ------ ----- ------
Operating
income......... 113 (9) 172 54 19 245 (31) 214
Interest
expense--net.... 71 (12) 97 40 (40)(c) 97 122 (e) 219
Other income..... (5) -- (8) (1) (9) (9)
------------- ----------- ------ ---- ---- ------ ----- ------
Income before
income tax and
minority
interest........ 47 3 83 15 59 157 (153) 4
Income tax
expense
(benefit)....... (12) 13 2 6 8 43 (f) 51
Minority
interest........ 1 -- 2 -- 2 2
------------- ----------- ------ ---- ---- ------ ----- ------
Income (loss)
from continuing
operations...... (Pounds) 58 (Pounds)(10) $ 79 $ 9 $ 59 $ 147 $(196) $ (49)
============= =========== ====== ==== ==== ====== ===== ======
Other Data:
Depreciation and
amortization... (Pounds) 76 $ 139 $ 31 $ 170 $ 201
EBITDA.......... 194 319 86 424 424 (g)

UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999

Sales--net....... (Pounds) 482 $ 787 $ 83 $ 870 $ $ 870
Cost of sales.... 394 (Pounds) 4 651 62 713 3 (d) 716
------------- ----------- ------ ---- ------ ----- ------
Gross profit.... 88 136 21 157 (3) 154
Operating
expenses........ 61 1 101 2 103 103
------------- ----------- ------ ---- ------ ----- ------
Operating
income......... 27 (5) 35 19 54 (3) 51
Interest
expense--net.... 16 (2) 23 9 $ (9)(c) 23 32 (e) 55
------------- ----------- ------ ---- ---- ------ ----- ------
Income (loss)
before income
tax ............ 11 (3) 12 10 9 31 (35) (4)
Income tax
expense
(benefit)....... 4 (2) 3 4 7 2 (f) 9
------------- ----------- ------ ---- ---- ------ ----- ------
Income (loss)
from continuing
operations...... (Pounds) 7 (Pounds) (1) $ 9 $ 6 $ 9 $ 24 $ (37) $ (13)
============= =========== ====== ==== ==== ====== ===== ======
Other Data:
Depreciation and
amortization... (Pounds) 22 $ 41 $ 8 $ 49 $ 52
EBITDA.......... 49 76 27 103 103

(See footnotes on next page)

(Footnotes from previous page)
- --------
(a) To adjust the financial information of the businesses transferred to us by
ICI from U.K. GAAP to U.S. GAAP. See Note 31 to the unaudited interim
condensed combined financial statements of the polyurethane chemicals,
selected petrochemicals and TiO\\2\\ businesses of ICI contained elsewhere
in this prospectus. The average exchange rates used to translate the
statement of operations are 1.6570 for the year ended December 31, 1998
and 1.6335 for the three months ended March 31, 1999.
(b) To change the accounting policy for turnaround and inspection costs to
conform to Huntsman Specialty's policy of capitalizing and amortizing such
costs.
(c) Reflects the reduction in interest expense for debt of Huntsman Specialty
that is not included in our transaction with ICI and Huntsman Specialty.
(d) Reflects the additional depreciation and amortization expense of the
assets transferred to us by ICI and by BP Chemicals. Plant and equipment
is depreciated over 15 years and intangible assets, primarily finance
costs, intellectual property, and non-compete agreements, are amortized
over 5 to 15 years.

Three Months
Year Ended Ended
December 31, 1998 March 31, 1999
----------------- --------------
(in millions)

Original depreciation expense recorded by
ICI..................................... $(147) $(41)
Pro forma depreciation expense on stepped
up assets............................... 178 44
----- ----
$ 31 $ 3
===== ====

(e) Reflects the sum of the following:

Three Months
Year Ended Ended
December 31, 1998 March 31, 1999
----------------- --------------
(in millions)

Interest on the notes (10.125%).......... $ 82 $ 21
Interest on the senior secured credit
facilities at LIBOR (5.2875%) plus
applicable margin....................... 137 34
Interest on ICI debt repaid.............. (97) (23)
----- ----
$ 122 $ 32
===== ====

If the interest rate changes by one-eighth of one percent, the amount of
interest expense would change by $2 million annually.

(f) Reflects the elimination of the historic U.S. tax provision for Huntsman
Specialty and ICI's polyurethane chemicals business and the foreign tax
effect of certain pro forma adjustments at an estimated effective rate of
35%.

(g) Pro Forma EBITDA does not include any amounts related to our transaction
with BP Chemicals. We believe pro forma EBITDA for the year ended December
31, 1998 would have increased by approximately $16 million to
approximately $440 million had our transaction with BP Chemicals been
consummated on January 1, 1998.

SELECTED HISTORICAL FINANCIAL DATA

The selected financial data set forth below presents the historical
financial data of Huntsman Specialty, our predecessor, and the predecessor of
Huntsman Specialty, as of the dates and for the periods indicated. The selected
financial data as of December 31, 1994 and 1995 and for the years ended have
been derived from audited financial statements. The selected financial data as
of December 31, 1996 has been derived from audited financial statements. The
selected financial data as of December 31, 1997 and 1998 and for the year ended
December 31, 1996, the two months ended February 28, 1997, the ten months ended
December 31, 1997 and the year ended December 31, 1998 has been derived from
the audited financial statements of Huntsman Specialty included elsewhere in
this prospectus. The selected financial data as of March 31, 1999 and for the
three months ended March 31, 1998 and 1999 has been derived from the unaudited
financial statements of Huntsman Specialty included elsewhere in this
prospectus. You should read the selected financial data in conjunction with
"Unaudited Pro Forma Financial Data", "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our audited historical
financial statements of Huntsman Specialty and its predecessor and the
accompanying notes included elsewhere in this prospectus.

Predecessor(1) Huntsman Specialty(1)
-------------------------------- ------------------------------------
Three
Months
Year Ended Two Ten Ended
December 31, Months Ended Months Ended Year Ended March 31,
------------------ February 28, December 31, December 31, ----------
1994(2) 1995 1996 1997 1998 1998 1998 1999
------- ---- ---- ------------ ------------ ------------ ---- ----
(dollars in millions) (dollars in millions)

Statement of Income
Data:
Sales--net............. $ 81 $316 $405 $61 $348 $339 $86 $ 83
Cost of sales.......... 88 309 377 65 300 277 72 62
---- ---- ---- --- ---- ---- --- ----
Gross profit (loss).... (7) 7 28 (4) 48 62 14 21
Operating expenses...... 14 20 19 2 8 8 3 2
---- ---- ---- --- ---- ---- --- ----
Operating income
(loss)................ (21) (13) 9 (6) 40 54 11 19
Interest expense--net.. -- -- -- -- 35 40 10 9
Other income........... 12 11 10 -- -- 1 -- --
---- ---- ---- --- ---- ---- --- ----
Income (loss) before
income tax............ (9) (2) 19 (6) 5 15 1 10
Income tax, expense
(benefit)............. (3) (1) 7 (2) 2 6 -- 4
---- ---- ---- --- ---- ---- --- ----
Income (loss) from
continuing
operations............ $ (6) $ (1) $ 12 $(4) $ 3 $ 9 $ 1 $ 6
==== ==== ==== === ==== ==== === ====
Other Data:
Depreciation and
amortization.......... $ 1 $ 1 $ -- $ 1 $ 26 $ 31 $ 8 $ 8
EBITDA(3).............. (8) 7 49 1 66 86 19 27
Net cash provided by
(used in) operating
activities............ (5) (73) 48 (5) 37 46 -- 8
Net cash used in
investing activities.. -- -- (1) (1) (510) (10) (2) (1)
Net cash provided by
(used in) financing
activities............ 5 73 (47) 6 483 (43) -- --
Capital expenditures... -- -- 1 1 2 10 2 1
Ratio of earnings to
fixed charges(4)...... -- -- 2.7x -- 1.1x 1.4x 1.1x 2.1x
Balance Sheet Data (at
period end):
Working capital(5)..... $ 45 $ 44 $ 39 $ 40 $ 28 $ 34
Total assets........... 199 243 292 594 578 583
Long-term debt(6)...... -- -- -- 464 428 429
Total liabilities(7)... 205 250 287 569 547 548
Stockholders' equity... (6) (7) 5 25 31 35

(See footnotes on next page)

(Footnotes from previous page)
- --------
(1) Effective March 1, 1997, Huntsman Specialty purchased from Texaco
Chemical, Inc. its PO business (see Note 1 to the financial statements of
Huntsman Specialty). Prior to March 1, 1997, Texaco Chemical leased
substantially all of the plant and equipment of the PO business under an
operating lease agreement. Also, Texaco Chemical received interest income
on net intercompany advances prior to the acquisition by Huntsman
Specialty. Historical rental expense for the years ended December 31,
1994, 1995, and 1996 and the two months ended February 28, 1997 was $0,
$14, $34 and $6 million, respectively. Depreciation and amortization is
net of $2 million, $6 million, $6 million and $0 million of amortization
of deferred income and suspense credits related to the lease for the two
years ended December 31, 1994, 1995 and 1996 and the two months ended
February 28, 1997. Interest income (expense) on net intercompany advances
was $(1) million, $4 million and $4 million for the years ended December
31, 1994, 1995, and 1996, respectively. No interest was charged or
credited during the two months ended February 28, 1997.

(2) The PO facility commenced operations in August 1994.

(3) EBITDA is defined as earnings from continuing operations before interest
expense, depreciation and amortization, and taxes. Prior to March 1, 1997,
EBITDA excludes interest income on net intercompany investments and
advances to Texaco Chemical and rental expenses (see footnote (1) above).
EBITDA is included in this prospectus because it is a basis on which we
assess our financial performance and debt service capabilities, and
because certain covenants in our borrowing arrangements are tied to
similar measures. However, EBITDA should not be considered in isolation or
viewed as a substitute for cash flow from operations, net income or other
measures of performance as defined by GAAP or as a measure of a company's
profitability or liquidity. We understand that while EBITDA is frequently
used by security analysts, lenders and others in their evaluation of
companies, EBITDA as used herein is not necessarily comparable to other
similarly titled captions of other companies due to potential
inconsistencies in the method of calculation.

(4) The ratio of earnings to fixed charges has been calculated by dividing (A)
income before income taxes plus fixed charges by (B) fixed charges. Fixed
charges are equal to interest expense (including amortization of deferred
financing costs), plus the portion of rent expense estimated to represent
interest. Earnings were insufficient to cover fixed charges by $2 million
and $6 million for the year ended December 31, 1995 and the two months
ended February 28, 1997. There were no fixed charges for the year ended
December 31, 1994.

(5) Working capital represents total current assets, less total current
liabilities, excluding cash and the current maturities of long-term debt.

(6) Long-term debt includes the current portion of long-term debt.

(7) Total liabilities includes mandatorily redeemable preferred stock of $68
million and $72 million at December 31, 1997 and 1998, respectively.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

General

We derive revenues, earnings and cash flow from the sale of a wide variety
of specialty and commodity chemicals through our four principal businesses:
polyurethane chemicals, PO, petrochemicals and TiO\\2\\. These products are
manufactured at facilities located in the Americas, Europe, Asia and Africa,
and are sold throughout the world.

Our four principal businesses are impacted to varying degrees by economic
conditions, prices of raw materials and global supply and demand pressures.
Generally, the demand for our polyurethane chemicals products has been
relatively resistant to changes in global economic conditions because of the
industry's growth through continuing innovation and product substitution. Sales
have also been resistant to specific industry cycles due to the wide variety of
end markets for polyurethane chemicals. As a result, sales volumes of our
polyurethane chemicals have grown at rates in excess of global GDP growth. The
global PO market is influenced by supply and demand imbalances. However, prices
and margins for PO in North America, the primary market in which our PO
business operates, have been relatively stable due to the limited number of
producers, the tendency of producers to consume a substantial amount of the PO
that they produce internally and the tendency of producers to enter into long-
term contracts with customers. PO demand is largely driven by the polyurethane
industry, and as a result, growth rates for PO have generally exceeded GDP
growth rates as well.

Petrochemicals and TiO\\2\\ sales have generally grown at rates that are
approximately equal to GDP growth. Many of the markets for our petrochemicals
and TiO\\2\\ products are cyclical and sensitive to changes in the balance
between supply and demand, the price of raw materials and the level of general
economic activity. Historically, the petrochemicals and TiO\\2\\ markets have
experienced alternating periods of tight supply and rising prices and profit
margins, followed by periods of capacity additions resulting in over-capacity
and falling prices and profit margins. Due to differing factors affecting
supply and demand, the cycles for the petrochemicals and TiO\\2\\ markets are
generally independent of one another. According to Chem Systems, the
petrochemical industry is at or near its cyclical trough following a period of
oversupply in the last few years and supply and demand characteristics are
expected to improve in coming years, resulting in improved profitability.

TiO\\2\\ prices have historically been driven by industry-wide operating
rates but have typically lagged behind movements in these rates by up to twelve
months due to the effects of product stocking and destocking by customers and
suppliers, contract arrangements and cyclicality. The industry experiences some
seasonality in its sales because sales of paints, the primary end use for
TiO\\2\\, are generally highest in the spring and summer months in the northern
hemisphere. This results in greater sales volumes in the first half of the year
because the proportion of our TiO\\2\\ products sold in Europe and North
America is greater than that sold in Asia and the rest of the world.

We conduct our businesses on a global basis using a number of currencies,
primarily the U.S. dollar and the deutschemark. For financial reporting
purposes, the results of the businesses transferred to us by ICI have been
reported in Sterling. See the audited and unaudited combined financial
statements of the businesses transferred to us by ICI included elsewhere in
this prospectus. As a result of the translation of our results of operations to
Sterling, operating costs have been impacted by movements in the value of the
Sterling relative to other currencies. Historically, the impacts on sales from
these currency translations have generally been offset by corresponding impacts
in expenses which has tended to mitigate the overall impact of currency
translations. In the future, we will be reporting our results of operations in
U.S. dollars and, because a greater portion of our business operations are
conducted in U.S. dollars, management believes a smaller proportion of our
sales and expenses will be subject to the impacts of currency translations.

Discussion of Huntsman Specialty Financial Data

General

The domestic market for PO has historically experienced less cyclicality
than the commodity petrochemical markets in general. However, we believe that
the PO market in the future may experience periods of tight supply, higher
prices and higher margins followed by capacity additions, oversupply and
declining or flat prices. We sell substantially all of our PO under multi-year
contracts and tolling agreements primarily in the domestic market. These
contracts generally use formulas to link PO prices to the underlying price of
propylene, PO's main raw material, thereby affording our margins some
protection from propylene price volatility.

We supply certain customers with PO under tolling agreements. Under these
agreements, the customer is obligated to deliver the propylene required to
produce the PO and we receive a toll fee which is adjusted for changes in
production costs. We sold approximately 62%, 42% and 42% of our PO under
tolling arrangements in 1996, 1997 and 1998, respectively.

The market for MTBE is cyclical, with prices and production rising or
falling based on changes in global supply and demand, raw material prices, the
cost structure of various producers and the price of gasoline. Historically,
the market for MTBE has been strongly influenced by changes in government
regulation in the U.S. and elsewhere, and could be further influenced by recent
proposed changes. See "Business--Propylene Oxide--Recent Developments". We
expect that the market for MTBE will continue to be influenced by government
regulation as the federal government and the states contemplate the future role
of MTBE in environmental policy and as foreign governments enact standards
limiting motor vehicle emissions. We sell the majority of our MTBE under long-
term contracts. Our emphasis on contractual, high-volume sales allows us to
obtain generally higher and more stable prices than are typically available on
the spot market.

The financial information for the years ended December 31, 1996 and 1997
discussed below are presented on a pro forma basis as if the acquisition by
Huntsman Specialty of the PO business from Texaco Chemical had occurred on
January 1, 1996. Prior to the acquisition on March 31, 1997, Texaco Chemical
leased substantially all of the plant and equipment of the PO business under an
operating lease agreement. The pro forma adjustments consist primarily of
adjustments to reflect the plant and equipment as if owned and not leased,
interest expense related to the financing to acquire Texaco Chemical and
related income tax adjustments.

The pro forma results for the years ended December 31, 1996 and 1997, the
actual results for the year ended December 31, 1998 and the three months ended
March 31, 1998 and 1999 are illustrated below.

Pro Forma Three Months
Year Ended Year Ended
December 31, Ended March 31,
-------------- December 31, -------------
1996 1997 1998 1998 1999
------ ------ ------------ ------ ------
(in millions)

Sales--net.......................... $ 405 $ 409 $339 $ 86 $ 83
Cost of sales....................... 363 364 277 72 62
------ ------ ---- ----- ------
Gross profit........................ 42 45 62 14 21
Selling, general and administrative
expenses (including research and
development expenses).............. 19 10 8 3 2
------ ------ ---- ----- ------
Income from operations.............. 23 35 54 11 19
Interest expense--net............... 42 42 40 10 9
Other income........................ - - 1 - -
------ ------ ---- ----- ------
Income (loss) before income tax..... (19) (7) 15 1 10
Income tax expense (benefit)........ (8) (2) 6 - 4
------ ------ ---- ----- ------
Net income (loss)................... $ (11) $ (5) $ 9 $ 1 $ 6
====== ====== ==== ===== ======

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31,
1998

Revenues. Revenues for our PO business in the first quarter of 1999
decreased by $3 million, or 3%, to $83 million from $86 million in the
comparable period in 1998. Lower revenues from the sale of PO and MTBE were
partially offset by higher revenues from the sale of PG and certain by-
products. Lower PO revenues were a result of a 7% decline in sales volumes
together with a 6% decline in the average sales price. Sales volumes declined
as a larger volume of PO production was used in the downstream manufacture of
PG. PO average sales prices declined as a result of a decline in the cost of
propylene, the primary raw material for PO. Lower MTBE revenues were a result
of a 23% decline in average sales prices as compared to the comparable period
in 1998, somewhat offset by a 19% increase in MTBE sales volume.

Gross profit. Gross profit in the first quarter of 1999 increased by $7
million, or 50%, to $21 million from $14 million in the comparable period in
1998. The increase was a result of lower costs of raw materials used to produce
MTBE as the cost of isobutane and methanol declined significantly as compared
to the comparable period in 1998.

Selling, general and administrative expenses (including research and
development expenses). Selling, general and administrative expenses (including
research and development expenses) ("SG&A") in the first quarter of 1999
remained relatively unchanged from the comparable period in of 1998.

Interest expense. Net interest expense in the first quarter of 1999
declined by $1 million, or 10%, to $9 million from $10 million in the
comparable period in 1998. Lower interest expense was a result of the repayment
of debt and lower interest rates during the period as compared to the
comparable period in 1998.

Net Income. Net income in the first quarter of 1999 increased by $5 million
to $6 million from $1 million during the comparable period in 1998 as a result
of the factors discussed above.

Year Ended December 31, 1998 (Actual) Compared to Year Ended December 31, 1997
(Pro Forma)

Revenues. Revenues for our PO business in 1998 decreased by $70 million, or
17%, to $339 million from $409 million in 1997. Lower revenues from the sale of
MTBE and by-products were partially offset by higher PG revenues. MTBE revenues
declined as a result of a 25% decline in average sales prices and a 10% decline
in sales volumes. Higher PG revenues were a result of a 68% increase in sales
volumes, partially offset by a 10% decline in average selling prices. Revenues
from the sale of PO remained essentially unchanged as a 1% decline in sales
volume was offset by a 1% increase in average sales prices. Higher average PO
sales prices were a result of higher tolling fees. PO and MTBE sales volumes
were negatively impacted by a 49 day turnaround and inspection ("T&I") period
which occurred during 1998.

Gross profit. Gross profit in 1998 increased by $17 million, or 38%, to $62
million from $45 million in 1997. The increase was a result of significantly
lower costs of raw materials used to produce MTBE as the cost of isobutane and
methanol declined significantly as compared to 1997. Gross margin was
negatively impacted by the T&I mentioned above.

Selling, general and administrative expenses (including research and
development expenses). SG&A in 1998 decreased by $2 million, or 20%, to $8
million from $10 million in 1997. Lower SG&A expenses were a result of ongoing
expense reduction initiatives which have been instituted since the acquisition
of the PO business by Huntsman Specialty in March 1997.

Interest expense. Net interest expense in 1998 declined by $2 million, or
5%, to $40 million from $42 million in 1997. Lower interest expense was a
result of the repayment of debt and lower interest rates during 1998 as
compared to 1997.

Net income. Net income in 1998 increased by $14 million to $9 million as
compared to a net loss of $5 million in 1997 as a result of the factors
discussed above.

Year Ended December 31, 1997 (Pro Forma) Compared to Year Ended December 31,
1996 (Pro Forma)

Revenues. Revenues for our PO business in 1997 increased by $4 million, or
1%, to $409 million from $405 million in 1996. Higher PO revenue was offset by
lower revenues from the sale of MTBE, PG and by-products. Higher PO revenue was
due to a 11% increase sales volume and a 17% increase in average selling prices
during 1997 as compared to 1996. Higher sales volume was a result of an
increase in PO production during 1997 resulting from internal engineering
efforts and higher capacity utilization. Higher average PO sales prices were a
result of higher tolling fees and higher customer contract prices. The decrease
in MTBE revenue was due to a 13% decline in sales volume partially offset by a
2% increase in average selling price during 1997 as compared to 1996. The
reduction in MTBE sales volume was primarily due to elimination of MTBE spot
sales purchased under contractual obligations not assumed by Huntsman Specialty
in connection with the acquisition of the PO business from Texaco.

Gross profit. Gross profit in 1997 increased by $3 million, or 7%, to $45
million from $42 million in 1996. The increase was primarily due to lower
quantities of PO, MTBE and PG purchased for resale in 1997 as compared to 1996.

Selling, general and administrative expenses (including research and
development expenses). SG&A in 1997 decreased by $9 million, or 47%, to $10
million from $19 million in 1996. Lower SG&A expenses were a result of the
elimination of certain expenses incurred by the company's predecessor.

Interest expense. Net interest expense was $42 million in both 1997 and
1996.

Net income. Net income in 1997 increased by $6 million to a loss of $5
million as compared to a net loss of $11 million in 1996 as a result of the
factors discussed above.

Discussion of ICI Businesses Combined Financial Data

The financial data and discussion presented below aggregates the financial
information of the polyurethane chemicals, petrochemicals and TiO\\2\\
businesses transferred to us by ICI. The financial information for these
businesses was historically prepared by ICI under U.K. GAAP in Sterling. The
financial data below has been derived from the U.K. GAAP financial statements
included elsewhere in this prospectus and adjusted for certain differences
between U.K. GAAP and U.S. GAAP. These adjustments have not generally been
significant for these businesses, but where there are significant differences
between U.K. GAAP and U.S. GAAP, these differences are discussed. Information
regarding adjustments from U.K. GAAP to U.S. GAAP is set forth in the combined
financial statements of the businesses transferred to us by ICI included
elsewhere in this prospectus. The financial data does not include any
information concerning the 20% interest in the Wilton olefins facility that BP
Chemicals owned during these periods. The following table presents combined
financial data for the polyurethane chemicals, petrochemicals and TiO\\2\\
businesses for the years ended December 31, 1996, 1997 and 1998 and for the
three months ended March 31, 1998 and 1999.

Three Months
Ended
Year Ended December 31, March 31,
------------------------------------------- ----------------------------
1996 1997 1998 1998 1999
------------- -------------- ------------- ----------- -----------
(in millions)

Turnover................ (Pounds)2,534 (Pounds)2, 337 (Pounds)2,011 (Pounds)532 (Pounds)482
------------- -------------- ------------- ----------- -----------
Operating costs and
other operating in-
come(1)................ 2,374 2,301 1,888 497 460
Operating exceptional
items.................. 11 56 10 -- --
Non-operating
exceptional items--
(profit)/loss on sale
or closure of
operations............. -- (23) 4 4 --
------------- -------------- ------------- ----------- -----------
Total................. 2,385 2,334 1,902 501 460
------------- -------------- ------------- ----------- -----------
Profit on ordinary ac-
tivities before inter-
est.................... 149 3 109 31 22
Net interest payable.... 66 55 59 18 14
Taxation on profit on
ordinary activities.... 39 (3) 1 (2) 2
Attributable to minori-
ties................... 3 1 1 -- --
------------- -------------- ------------- ----------- -----------
Net profit/(loss)....... (Pounds) 41 (Pounds) (50) (Pounds) 48 (Pounds) 15 (Pounds) 6
============= ============== ============= =========== ===========

- --------
(1)Includes income from fixed asset investments.

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31,
1998

Turnover. Turnover in the first quarter of 1999 decreased by (Pounds)50
million, or 9%, to (Pounds)482 million from (Pounds)532 million in the
comparable period of 1998. The decline was primarily attributable to a
(Pounds)56 million decline in petrochemicals turnover resulting from lower
prices and volumes and from lower turnover from our feedstock procurement
activities. As part of our normal ongoing operations, we engage in feedstock
procurement activities which include the buying and selling of naphtha and
other feedstocks with the primary objective of ensuring a reliable and cost
competitive raw material supply. Polyurethane chemicals and TiO\\2\\ turnover
were essentially unchanged.

Operating costs and other operating income. Operating costs and other
operating income in the first quarter of 1999 decreased by (Pounds)37 million,
or 7%, to (Pounds)460 million from (Pounds)497 million in the comparable period
in 1998. This decline is due primarily to lower raw material costs for
petrochemicals and from lower product costs relating to our petrochemicals
feedstock procurement activities.

Non-operating exceptional items. There were no non-operating exceptional
items in the first quarter of 1999 compared with non-operating exceptional
losses of (Pounds)4 million in the comparable period in 1998 which related to
minor disposals in that period.

Net interest payable. Net interest payable in the first quarter of 1999
decreased by (Pounds)4 million, or 22%, to (Pounds)14 million from (Pounds)18
million in the comparable period in 1998. This decrease was primarily due to a
decrease in the weighted average interest rate to 7.3% in the first quarter of
1999 from 9.0% in the first quarter of 1998.

Taxation. The tax charge of (Pounds)2 million for the first quarter of 1999
compares with a credit of (Pounds)2 million for the comparable period of 1998.

Net profit. The net profit for the first quarter of 1999 of (Pounds)6
million compares with a net profit of (Pounds)15 million for the comparable
period of 1998, a decrease in profit of (Pounds)9 million, which resulted from
the factors described above.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

Turnover. Turnover in 1998 decreased by (Pounds)326 million, or 14%, to
(Pounds)2,011 million from (Pounds)2,337 million in 1997. The decrease was due
primarily to petrochemicals turnover which was lower by (Pounds)309 million
resulting from a significant decrease in the turnover of our feedstocks
procurement activities, and lower average selling prices for our olefins and
aromatics products. Additionally, polyurethane chemicals turnover declined due
to MDI price erosion in Asia and the impact of unfavorable currency
translations. These declines were marginally offset by an increase of
(Pounds)27 million in TiO\\2\\ turnover due to higher average selling prices.
Turnover was further reduced by a continuation of the 1997 decrease in
paraxylene demand, reflecting weakness in the PTA market. Overall sales volumes
in TiO\\2\\ decreased 6% in 1998 as compared to 1997, primarily due to
significantly lower demand in Asia. However, these declines were partially
offset by an increase in polyurethane sales volumes, which was driven by an 8%
increase in sales volumes for MDI.

Operating costs and other operating income. Operating costs and other
operating income in 1998 decreased by (Pounds)413 million, or 18%, to
(Pounds)1,888 million from (Pounds)2,301 million in 1997. The decrease was
primarily due to lower raw material costs for petrochemicals and polyurethane
chemicals. Specifically, the price of naphtha declined, affecting manufacturing
cost for petrochemicals, and the price of benzene declined, affecting
manufacturing costs for polyurethane chemicals.

Operating exceptional items. Operating exceptional items in 1998 decreased
by (Pounds)46 million, to (Pounds)10 million from (Pounds)56 million in 1997.
The 1998 charge was comprised of rationalization expenditures for our TiO\\2\\
business.

Non-operating exceptional items. Net non-operating exceptional losses from
disposal of businesses of (Pounds)4 million in 1998 compared with net gains of
(Pounds)23 million in the previous year.

Net interest payable. Net interest payable increased by (Pounds)4 million,
or 7%, to (Pounds)59 million in 1998 from (Pounds)55 million in 1997. The
increase was primarily due to an increase in the weighted average interest rate
to 8.0% in 1998 from 7.6% in 1997. Net interest payable under U.K. GAAP was
(Pounds)71 million in 1998 compared with (Pounds)69 million in 1997. The
difference between the U.K. and U.S. GAAP amounts resulted from the U.S. GAAP
requirement to capitalize interest incurred as part of the cost of constructing
fixed assets.

Taxation. Under U.S. GAAP, there was a tax charge of (Pounds)1 million in
1998 compared to a tax credit of (Pounds)3 million in 1997. This represents an
effective tax rate of 2% in 1998 and 6% in 1997. In

1998, the effective rate was relatively low due to brought forward trading
losses being utilized against current year profits. The 1997 effective rate
reflects the net impact of a non-deductible write down of the aromatics assets
within petrochemicals and deferred tax assets recognized for TiO\\2\\ carried
forward trading losses. Under U.S. GAAP, deferred taxation is provided on a
full provision basis, whereas under U.K. GAAP, provision is only made for taxes
payable or recoverable in the foreseeable future. The effective tax rates under
U.K. GAAP were 26% in 1998 and 32% in 1997. The differences between U.S. and
U.K. GAAP are primarily driven by the fact that benefit for carried forward
trading losses was taken in 1997 for U.S. GAAP and in 1998 for U.K. GAAP
purposes.

Net profit. The net profit for 1998 of (Pounds)48 million compares with a
net loss of (Pounds)50 million for 1997, an improvement in profit of (Pounds)98
million, which resulted from the factors described above.

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Turnover. Turnover in 1997 decreased by (Pounds)197 million, or 8%, to
(Pounds)2,337 million from (Pounds)2,534 million in 1996. The decline was
primarily attributable to the impact of unfavorable currency translations.
Additionally, average MDI sales prices in our polyurethane chemicals business
declined due to price erosion in Asia and TiO\\2\\ average sales prices
declined due to destocking by customers in 1997. In our petrochemicals
business, paraxylene prices fell in local currency terms by 16%. In our
polyurethane chemicals business, MDI volumes increased 13%; TiO\\2\\ volumes
increased 6%; and petrochemicals volumes decreased 13% for olefins, 10% for
paraxylene.

Operating costs and other operating income. Operating costs and other
operating income in 1997 decreased by (Pounds)73 million, or 3%, to
(Pounds)2,301 million from (Pounds)2,374 million in 1996 due primarily to lower
raw material costs, resulting from the impact of favorable currency
translations, partially offset by the increase in costs due to higher sales of
polyurethane chemicals.

Operating exceptional items. Operating exceptional items increased by
(Pounds)45 million to (Pounds)56 million from (Pounds)11 million in 1996. The
1997 charge included (Pounds)14 million for our TiO\\2\\ business
rationalization program, (Pounds)17 million to settle a raw material supplier
dispute, and (Pounds)25 million to write down the book value of our aromatics
assets.

Non-operating exceptional items. Net non-operating exceptional items in
1997 of (Pounds)23 million comprised a (Pounds)25 million profit on the sale of
our Australian polyurethane chemicals business, offset by a (Pounds)2 million
loss on other asset disposals. There were no non-operating exceptional items in
1996.

Net interest payable. Net interest payable in 1997 decreased by (Pounds)11
million, or 17%, to (Pounds)55 million in 1997 from (Pounds)66 million in 1996.
This decrease was primarily due to a decrease in the weighted average interest
rate to 7.6% in 1997 from 8.5% in 1996. Net interest payable under U.K. GAAP
was (Pounds)69 million in 1997 compared with (Pounds)78 million in 1996. The
difference between the U.K. and U.S. GAAP amounts resulted from the U.S. GAAP
requirement to capitalize interest incurred as part of the cost of constructing
fixed assets.

Taxation. Under U.S. GAAP, there was a tax credit of (Pounds)3 million in
1997 compared to a tax charge of (Pounds)39 million in 1996. This represents an
effective tax rate of 6% in 1997 and 47% in 1996. The 1997 effective rate
reflects the net impact of a non-deductible write down of the aromatics assets
within petrochemicals and deferred tax assets recognized for TiO\\2\\ carried
forward trading losses. The 1996 effective rate is primarily caused by TiO\\2\\
trading losses not being recognized in that year as utilization in future
periods was uncertain. Under U.S. GAAP, deferred taxation is provided on a full
provision basis, whereas under U.K. GAAP, provision is only made for taxes
payable or recoverable in the foreseeable future. The effective tax rates under
U.K. GAAP are 32% in 1997 and 34% in

1996. The significant difference in 1997 between U.S. and U.K. GAAP is
primarily driven by the fact that no deferred tax asset was recognized under
U.K. GAAP for trading losses.

Net profit/(loss). The net loss for 1997 of (Pounds)50 million compares
with a net profit of (Pounds)41 million for 1996, a reduction in profit of
(Pounds)91 million which resulted from the factors described above.

Discussion of Polyurethane Chemicals, Petrochemicals and TiO\\2\\ Businesses
Financial Data

The financial data and discussion presented below for each of the
polyurethane chemicals, petrochemicals and TiO\\2\\ businesses has been derived
from financial statements prepared under U.K. GAAP in Sterling and adjusted for
certain differences between U.K. GAAP and U.S. GAAP. The financial data does
not include any information concerning 20% interest in the Wilton olefins
facility that BP Chemicals owned during these periods.

Polyurethane Chemicals

The results for the years ended December 31, 1996, 1997 and 1998 and for
the three months ended March 31, 1998 and 1999 are illustrated below. The
financial information for the polyurethane chemicals business was historically
prepared by ICI under U.K. GAAP in Sterling. The financial data presented below
has been derived from the U.K. GAAP financial statements included elsewhere in
this prospectus, adjusted for certain significant differences between U.K. GAAP
and U.S. GAAP and translated into U.S. dollars at average exchange rates of
1.6570 and 1.6335 for the year ended December 31, 1998 and the three months
ended March 31, 1999, respectively. This translation does not necessarily
result in the same U.S. dollar amounts as would have arisen if the translation
had been performed in accordance with U.S. GAAP.

Three Months
Ended
Year Ended December 31, March 31,
-------------------------------- ---------------------
1996 1997 1998 1998 1999
-------- -------- -------------- -------- ------------
(Pounds) (Pounds) (Pounds) $ (Pounds) (Pounds) $
-------- -------- -------- ----- -------- -------- ---
(in millions)

Sales................... 907 860 816 1,352 198 206 336
Cost of sales, operating
expenses and other
income, net............ 795 762 727 1,204 185 188 308
--- --- --- ----- --- --- ---
Income before interest
and income tax......... 112 98 89 148 13 18 28
=== === === ===== === === ===

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31,
1998

Sales. Sales of polyurethane chemicals in the first quarter of 1999
increased by (Pounds)8 million, or 4%, to (Pounds)206 million from (Pounds)198
million in the comparable period in 1998 primarily due to increased sales
volumes in the U.S. and Asia.

Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in the first quarter of 1999 increased
by (Pounds)3 million, or 2%, to (Pounds)188 million from (Pounds)185 million in
the comparable period in 1998.

Income before interest and income tax. Income before interest and income
tax in the first quarter of 1999 of (Pounds)18 million compares with (Pounds)13
million for the comparable period of 1998, an increase in income before
interest and tax of (Pounds)5 million as a result of the factors described
above.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

Sales. Sales of polyurethane chemicals in 1998 decreased by (Pounds)44
million, or 5%, to (Pounds)816 million from (Pounds)860 million in 1997 due
primarily to a decrease in the average sales price of MDI

resulting from lower underlying raw material prices, price pressures in Asia
and the impact of unfavorable currency translations. The price declines and
unfavorable currency translations were partially offset by increased MDI
volumes of 8%. This volume growth was driven by a 14% sales volume increase in
the U.S. resulting primarily from continued growth in wood binders and a 10%
growth in European sales volumes. These volume gains were partially offset by a
volume decline of 19% in the Asian market related to a weakening of the Asian
economy.

Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in 1998 decreased by (Pounds)35
million, or 5%, to (Pounds)727 million from (Pounds)762 million in 1997. This
decline was largely attributable to a decline in the price of benzene, MDI's
primary raw material. Additionally, operating expenses declined due to lower
manufacturing costs which resulted from improvements in our production process
following a restructuring of our European manufacturing assets.

Income before interest and income tax. Income before interest and income
tax for 1998 of (Pounds)89 million compares with (Pounds)98 million for 1997, a
decrease in income before interest and income tax of (Pounds)9 million as a
result of the factors described above.

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Sales. Sales of polyurethane chemicals in 1997 decreased by (Pounds)47
million, or 5%, to (Pounds)860 million from (Pounds)907 million in 1996. This
decrease was attributable primarily to a decline in average MDI sales prices
and the substantial impact of unfavorable currency translations which more than
offset sales volume increases. MDI prices declined primarily as a result of
general pricing pressures in Asia. Lower Asian prices reflected the addition of
significant global capacity, coupled with a weakening of the Asian economy. In
1997, MDI sales volumes increased 13% from 1996 due to significant growth of
MDI in the U.S. of 19%. This increase was driven by demand for the MDI based
wood binder applications and insulation panels used in construction. MDI sales
volumes in Europe grew at 9%, while sales volumes in Asia declined by 2%.

Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in 1997 decreased by (Pounds)33
million, or 4%, to (Pounds)762 million from (Pounds)795 million in 1996
including a one-time gain of (Pounds)25 million resulting from the sale of our
Australian polyurethane chemicals business. Excluding the impact of the one-
time gain, costs of sales, operating expenses and other income/expense in 1997
decreased by (Pounds)8 million.

Income before interest and income tax. Income before interest and income
tax in 1997 of (Pounds)98 million compares with (Pounds)112 million for 1996, a
decrease in income before interest and income tax of (Pounds)14 million as a
result of the factors described above.

Petrochemicals

The results for the years ended December 31, 1996, 1997, and 1998 and for
the three months ended March 31, 1998 and 1999 are illustrated below. The
financial data does not include any information concerning BP Chemicals'
interest in the Wilton olefins facility. The financial information for the
petrochemicals business was historically prepared by ICI under U.K. GAAP in
Sterling. The financial data presented below has been derived from the U.K.
GAAP financial statements included elsewhere in this Offering Circular,
adjusted for certain significant differences between U.K. GAAP and U.S. GAAP
and translated into U.S. dollars at average exchange rates of 1.6570 and 1.6335
for the year ended December 31, 1998 and the three months ended March 31, 1999,
respectively. This

translation does not necessarily result in the same U.S. dollar amounts as
would have arisen if the translation had been performed in accordance with U.S.
GAAP.

Sales................... 1,009 930 621 1,029 191 135 221
Cost of sales, operating
expenses and other
income, net............ 954 964 653 1,082 184 143 234
----- --- --- ----- --- --- ---
Income (loss) before
interest and income
tax.................... 55 (34) (32) (53) 7 (8) (13)
===== === === ===== === === ===

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31,
1998

Sales. Sales of petrochemicals in the first quarter of 1999 decreased by
(Pounds)56 million, or 29%, to (Pounds)135 million from (Pounds)191 million in
the comparable period in 1998. This decrease was primarily a result of lower
revenues from sales of both olefins and aromatics and a reduction in sales
related to our feedstock procurement activities. As part of our normal ongoing
operations, we engage in feedstock procurement activities, which include the
buying and selling of naphtha and other feedstocks with the primary objective
of ensuring a reliable and cost competitive raw material supply. Revenues from
our sales of olefins and aromatics decreased as a result of lower average sales
prices, partially offset by the impact of favorable currency translations.
Average sales prices decreased due primarily to a weakening in the European
petrochemical sector and lower raw material costs. Sales decreases from our
feedstock procurement activities were substantially offset by a reduction in
our cost of sales as a result of a reduction in crude oil and feedstock prices.

Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in the first quarter of 1999 decreased
by (Pounds)41 million, or 22%, to (Pounds)143 million from (Pounds)184 million
in the comparable period in 1998. This decrease was primarily attributable to a
decline in raw material costs and a reduction in our cost of sales related to
our feedstock procurement activities.

Income (loss) before interest and income tax. The loss before interest and
income tax in the first quarter of 1999 of (Pounds)8 million compares with a
profit of (Pounds)7 million for the comparable period in 1998, a decrease in
income before interest and income tax of (Pounds)15 million as a result of the
factors described above.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

Sales. Sales of petrochemicals in 1998 decreased by (Pounds)309 million, or
33%, to (Pounds)621 million from (Pounds)930 million in 1997. This decrease was
primarily a result of lower revenues from sales of olefins and aromatics and a
reduction in sales related to our feedstock procurement activities. Revenues
from our sales of olefins and aromatics decreased primarily as a result of
decreases in average sales prices and, to a lesser extent, decreases in sales
volumes. For example, average sales prices for two of our primary petrochemical
products, ethylene and paraxylene, declined by 16% and 20%, respectively. Sales
related to our feedstock procurement activities accounted for nearly half of
our sales decrease and were substantially offset by a reduction in our cost of
sales due to a substantial reduction in crude oil and feedstock prices.

Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in 1998 decreased by (Pounds)311
million, or 32%, to (Pounds)653 million from

(Pounds)964 million in 1997. This decrease was primarily attributable to a
decline in raw material costs and lower volumes of finished product purchased
for resale. The average cost for our primary raw material, naphtha, declined by
31%. Additionally, operating expenses were (Pounds)25 million lower due to the
absence of a one-time write down which was expensed in 1997.

Income (loss) before interest and income tax. The loss before interest and
income tax for 1998 of (Pounds)32 million compares with a loss of (Pounds)34
million for 1997, a reduction in loss before interest and income tax of
(Pounds)2 million as a result of the factors described above.

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Sales. Sales of petrochemicals in 1997 decreased by (Pounds)79 million, or
8%, to (Pounds)930 million from (Pounds)1,009 million in 1996. The decrease was
attributable to a decline in the average sales price and sales volumes of
paraxylene and the significant impact of unfavorable currency fluctuations.

Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in 1997 increased by (Pounds)10
million, or 1%, to (Pounds)964 million from (Pounds)954 million in 1996. This
increase was primarily attributable to a one-time charge of (Pounds)25 million
related to the write down of the book value of our aromatics facility. The
increase was partially offset by the impact of favorable currency translations
impacting the cost of our primary feedstock, naphtha.

Income (loss) before interest and income tax. The loss before interest and
income tax for 1997 of (Pounds)34 million compares with income before interest
and tax of (Pounds)55 million for 1996, a decrease in income before interest
and income tax of (Pounds)89 million as a result of the factors described
above.

Titanium Dioxide

The results for the years ended December 31, 1996, 1997 and 1998 and for
the three months ended March 31, 1998 and 1999 are illustrated below. The
financial information for the TiO\\2\\ business was historically prepared by
ICI under U.K. GAAP in Sterling. The financial data presented below has been
derived from the U.K. GAAP financial statements included elsewhere in this
Offering Circular, adjusted for certain significant differences between U.K.
GAAP and U.S. GAAP and translated into U.S. dollars at average exchange rates
of 1.6570 and 1.6335 for the year ended December 31, 1998 and the three months
ended March 31, 1999, respectively. This translation does not necessarily
result in the same U.S. dollar amounts as would have arisen if the translation
had been performed in accordance with U.S. GAAP.

Three Months
Ended
Year Ended December 31, March 31,
------------------------------ ---------------------
1996 1997 1998 1998 1999
-------- -------- ------------ -------- ------------
(Pounds) (Pounds) (Pounds) $ (Pounds) (Pounds) $
-------- -------- -------- --- -------- -------- ---
(in millions)

Sales.................... 618 547 574 951 143 141 230
Cost of sales, operating
expenses and other
income, net............. 636 608 522 865 132 129 210
--- --- --- --- --- --- ---
Income (loss) before
interest and income
tax..................... (18) (61) 52 86 11 12 20
=== === === === === === ===

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31,
1998

Sales. Sales of TiO\\2\\ in the first quarter of 1999 decreased by
(Pounds)2 million, or 1%, to (Pounds)141 million from (Pounds)143 million in
the comparable period in 1998. The decline was primarily attributable to lower
sales volumes due to weakened demand in Europe, substantially offset by higher
average sales prices in the first quarter of 1999 resulting from price
increases implemented in 1998.

Cost of sales, operating costs and other income, net. Cost of sales,
operating costs and other income, net in the first quarter of 1999 decreased by
(Pounds)3 million, or 2%, to (Pounds)129 million from (Pounds)l32 million in
the comparable period in 1998. This decline was primarily a result of lower
sales volumes and a reduction in operating expenses resulting from our ongoing
cost reduction initiatives.

Income (loss) before interest and income tax. Income before interest and
income tax for the three months ended March 31, 1999 of (Pounds)l2 million
compares with (Pounds)ll million for the same period in 1998, an increase in
income before interest and income tax of (Pounds)l million as a result of the
factors described above.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

Sales. Sales of TiO\\2\\ in 1998 increased by (Pounds)27 million, or 5%, to
(Pounds)574 million from (Pounds)547 million in 1997. The increase was
primarily a result of higher average local selling prices in Europe and North
America. This increase was partially offset by the impact of unfavorable
currency translations, and, to a lesser extent, lower sales volumes in Asia.

Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in 1998 decreased by (Pounds)86
million, or 14%, to (Pounds)522 million from (Pounds)608 million in 1997. The
decline was a result of lower operating costs, primarily due to favorable
currency translations, and a reduction in operating expenses resulting from our
ongoing cost reduction initiatives. Additionally, during 1998, we recognized
exceptional charges of (Pounds)10 million, as compared to an exceptional charge
of (Pounds)31 million in 1997. The 1998 charge included severance costs
relating to the continued implementation of our ongoing cost reduction
initiatives.

Income (loss) before interest and income tax. Income before interest and
income tax for 1998 of (Pounds)52 million compares with a loss of (Pounds)61
million in 1997, an increase in income before interest and taxation of
(Pounds)113 million as a result of the factors described above.

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Sales. Sales of TiO\\2\\ in 1997 decreased by (Pounds)71 million, or 11%,
to (Pounds)547 million from (Pounds)618 million in 1996. The decrease was
primarily attributable to lower average selling prices and unfavorable currency
translations, partially offset by increased sales volumes. Prices dropped
sharply in the second half of 1996 as customers reduced their stock levels in
response to falling demand in Europe. Although prices stabilized and improved
from April 1997 onwards, the overall average selling price was approximately 7%
lower than the average selling price in 1996. Excluding the impact of currency
translations, sales would have been substantially the same as 1996.

Cost of sales, operating expenses and other income, net. Cost of sales,
operating expenses and other income, net in 1997 decreased by (Pounds)28
million, or 4%, to (Pounds)608 million from (Pounds)636 million in 1996. The
decrease was primarily attributable to favorable currency translations,
partially offset by an increase in exceptional charges of (Pounds)20 million
which were (Pounds)31 million in 1997 compared with (Pounds)ll million in 1996.
The exceptional charges for 1997 were comprised of (Pounds)17 million to settle
a supplier dispute, (Pounds)l0 million in severance charges in connection with
our ongoing cost reduction initiative and (Pounds)4 million of other charges.

Income (loss) before interest and income tax. The loss before interest and
income tax for 1997 of (Pounds)61 million compares with a loss of (Pounds)18
million in 1996, an increase of (Pounds)43 million as a result of the factors
described above.

Recent Developments

Concurrently with our acquisition of ICI's and Huntsman Specialty's
businesses, we also acquired BP Chemicals's 20% ownership interest in the
Wilton olefins facility. In connection with our acquisition of this interest
from BP Chemicals, BP Chemicals has agreed to become a significant long-term
customer of our petrochemicals business. We believe that pro forma Adjusted
EBITDA for the year ended December 31, 1998 would have increased by
approximately $16 million to approximately $497 million had our acquisition of
BP Chemicals's interest in the Wilton olefins facility been consummated on
January 1, 1998.

Liquidity and Capital Resources

Liquidity

We are highly leveraged as a result of the debt that we incurred to fund
the transfer of ICI's and Huntsman Specialty's businesses to us.
Contemporaneously with the closing of the transfer of those businesses, our
company and Huntsman ICI Holdings took the following actions:

. We issued the outstanding notes.

. We entered into the senior secured credit facilities which provide for
borrowings of up to $2,070 million, including $400 million under a
revolving facility, a substantial portion of which remains available as
of the date of this Prospectus. The credit facilities are secured by a
first priority perfected lien on substantially all of our assets. See
"Description of Credit Facilities".

. Huntsman ICI Holdings issued the senior discount notes and the senior
subordinated discount notes to ICI. See "The Transaction--Transaction
Consideration".

Our senior secured credit facilities currently prohibit, and the indenture
governing the notes currently restricts, payment of dividends, distributions,
loans or advances to us by our subsidiaries. We do, however, anticipate that
borrowings under the credit facilities and cash flow from operations will be
sufficient for us to make required payments of principal and interest on our
debt when due, as well as to fund capital expenditures.

Capital Expenditures

Our capital expenditures for our PO business for the three months ended
March 31, 1999 were $1 million, a decrease of $1 million from the comparable
period in the prior year; combined capital expenditures for our polyurethane
chemicals, petrochemicals and TiO\\2\\ businesses collectively were (Pounds)20
million and (Pounds)43 million in the first quarter of 1998 and 1999,
respectively. Capital expenditures for the years ended December 31, 1996, 1997
and 1998 were $1 million, $3 million and $10 million, respectively, for our PO
business. Combined capital expenditures for our polyurethane chemicals,
petrochemicals and TiO\\2\\ businesses collectively were (Pounds)190 million,
(Pounds)170 million and (Pounds)134 million for the years ended December 31,
1996, 1997 and 1998, respectively. The increases reflect expenditures relating
to extensive production process improvements, primarily for our polyurethane
chemicals and TiO\\2\\ businesses. For our polyurethane chemicals business,
these improvements, expected to be completed in 1999, included the closure of
our Hillhouse, U.K. facility in 1997, the construction of our nitrobenzene
facility at Wilton, U.K. completed in 1997, the capacity expansion at
Rozenburg, Netherlands completed in 1997, and the capacity expansion program at
our Geismar, Louisiana facility which is expected to be completed in 1999. We
expect to incur an additional (Pounds)115 million during 1999 to complete the
capacity expansion at the Geismar facility, approximately (Pounds)87 million of
which had been expended at June 30, 1999. Aside from the completion of the
expansion program at the Geismar facility, we do not have any planned
extraordinary capital expenditures in the near-term. We estimate our total
capital expenditures for 1999 and 2000, including expenditures relating to
environmental compliance, to be between $200 million and $250 million in each
year.

Environmental Regulation

The operations of any chemical manufacturing plant and the distribution of
chemical products, and the related production of co-products and wastes, entail
risk of adverse environmental effects, and therefore, we are subject to
extensive federal, state, local and foreign laws, regulations, rules and
ordinances relating to pollution, the protection of the environment and the
generation, storage, handling, transportation, treatment, disposal and
remediation of hazardous substances and waste materials. In the ordinary course
of business, we are subject continually to environmental inspections and
monitoring by governmental enforcement authorities. The ultimate costs under
environmental laws and the timing of such costs are difficult to predict;
however, potentially significant expenditures could be required in order to
comply with existing or future environmental laws.

Our costs and operating expenses and capital expenditures relating to
safety, health and environmental matters totaled approximately $4 million in
1996, $3 million in 1997 and $3 million in 1998 for our PO business.
Environmental expenses and capital expenditures for our polyurethane chemicals,
petrochemicals and TiO\\2\\ businesses were approximately (Pounds)53 million,
(Pounds)44 million and (Pounds)42 million in 1996, 1997 and 1998, respectively.
Costs in 1999 and 2000 are expected to remain at historical levels in order to
cover, among other things, our routine measures to prevent, contain and clean
up spills of materials that occur in the ordinary course of business. Our
estimated capital expenditures for environmental, safety and health matters in
1999 and 2000 are expected to be similar to historical expenditures. Capital
expenditures are planned, for example, under national legislation, implementing
the European Union Directive on Integrated Pollution Prevention and Control.
Under this directive, the majority of our plants will, over the next few years,
be required to obtain governmental authorizations which will regulate air and
water discharges, waste management and other matters relating to the impact of
operations on the environment, and to conduct site assessments to evaluate
environmental conditions. Although the implementing legislation in most Member
States is not yet in effect, it is likely that additional expenditures may be
necessary in some cases to meet the requirements of authorizations under this
directive. In particular, we believe that related expenditures to upgrade our
wastewater treatment facilities at several sites may be necessary and
associated costs could be material. Wastewater treatment upgrades unrelated to
this initiative also are planned at certain facilities. In addition, we may
incur material expenditures in complying with the European Union Directive on
Hazardous Waste Incineration beyond currently anticipated expenditures,
particularly in relation to our Wilton facility. It is also possible that
additional expenditures to reduce air emissions at two of our U.K. facilities
may be material. Capital expenditures and, to a lesser extent, costs and
operating expenses relating to environmental matters will be subject to
evolving regulatory requirements and will depend on the timing of the
promulgation of specific standards which impose requirements on our operations.
Therefore, we cannot assure you that material capital expenditures beyond those
currently anticipated will not be required under environmental laws. See
"Business--Environmental Regulations".

Risk Management

We are exposed to market risk, including changes in interest rates,
currency exchange rates, and certain commodity prices. To manage the volatility
relating to these exposures, we enter into various derivative transactions. We
do not hold or issue derivative financial instruments for trading purposes.

Our cash flows and earnings are subject to fluctuations due to exchange
rate variation. Historically, the businesses transferred to us by ICI have
managed the majority of their foreign currency exposures by entering into
short-term forward foreign exchange contracts with ICI. In addition, short-term
exposures to changing foreign currency exchange rates at certain of our foreign
subsidiaries are managed through financial market transactions, principally
through the purchase of forward foreign exchange contracts (with maturities of
six months or less) with various financial

institutions. Huntsman Specialty did not hedge its foreign currency exposure in
a manner that would entirely eliminate the impact of currency fluctuations on
our cash flows and earnings. While we do not expect that our foreign currency
hedging activities will significantly change, the scope of our hedging
activities may change due to the currency denominations of the indebtedness
that we incurred to fund our transaction with ICI and Huntsman Specialty.

Historically, Huntsman Specialty used interest rate swaps, caps and collar
transactions entered into with various financial institutions to hedge against
the movements in market interest rates associated with our floating rate debt
obligations. We do not hedge our interest rate exposure in a manner that would
entirely eliminate the effects of changes in market interest rates on our cash
flow and earnings. Under the terms of our senior secured credit facilities, we
will be required to hedge a significant portion of our floating rate debt. As a
result, we expect that our interest rate hedging activities will increase in
the future.

In order to reduce our overall raw material costs, our petrochemical
business engages in feedstock procurement activities. From time-to-time, we
have entered into short-term (with a maturity less than one year) forward
purchase agreements for various feedstocks, including crude oil, naphtha, and
LPGs. From time to time, we also purchase and sell crude oil futures. We do not
hedge our commodity exposure in a manner that would entirely eliminate the
effects of changes in commodity prices on our cash flows and earnings.

Recently Issued Financial Accounting Standards

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No.133
established accounting and reporting standards for derivative instruments and
hedging activities. It requires that an entity recognize all derivatives as
assets or liabilities in the balance sheet and measure those instruments at
fair value. SFAS No.133 is effective for our financial statements for the year
ending December 31, 2001. We are currently evaluating the effects of SFAS
No.133 on our financial statements.

Year 2000 Preparations

The "Year 2000 problem" is the result of computer programs being designed
to read and store dates using only the last two digits of the year rather than
four digits to define the applicable year and therefore may not correctly
recognize date changes such as the change from December 31, 1999 to January 1,
2000. This could result in a system failure. The Year 2000 problem is believed
to affect virtually all companies and organizations which include us as well as
our key suppliers and customers. Our failure, or the failure of our key
suppliers or customers, to address this issue could adversely affect our
operations.

We aim to have our businesses "Year 2000 ready" by September 30, 1999. In
conjunction with external advisers, we have identified various IT systems, such
as our distributed control systems that we consider to be "mission critical"
and have developed a Year 2000 plan including remediation and contingency
planning for converting these systems for our Year 2000 readiness. More
specifically, this plan includes identifying all material information
technology components, embedded chips, and facilities that are exclusively or
predominantly used in the businesses. All key components dedicated in the
manufacturing process have been inventoried and prioritized, and will be
remediated to Year 2000 readiness. Additionally, we have successfully conducted
confirmation testing in relation to all commercial business systems and
infrastructure provided by Huntsman Specialty or ICI for our businesses and
have reason to believe that key functionality relating to these businesses will
be Year 2000 ready, as determined by such confirmation testing.

We are dependent upon a large number of business support and manufacturing
distributive control systems in our business operations. A degree of risk
exists that we will not adequately identify and remedy each Year 2000 problem
that exists. However, we believe that we have minimized our risks through
prioritizing our efforts to focus on "mission critical" systems first and
verifying our approach with an objective third party. Another concern is our
dependency on and demands for a limited number of internal professionals with
critical knowledge and expertise required to remedy Year 2000 issues. We have
tried to minimize these concerns through supplementing critical internal
personnel with systems and Year 2000 readiness consultants to assist in the
remediation effort.

The economy in general may be adversely affected by risks associated with
the Year 2000 issue. Our business, financial condition, results of operations
or cash flows could be adversely affected if systems on which we rely,
including systems that are operated by third parties with whom we do business,
are not Year 2000 ready in time. Our operations are dependent on a continuous
supply of key services from raw material suppliers and utility and
transportation providers. Accordingly, as an integral part of our Year 2000
preparations we are evaluating key third party and single-source suppliers of
utilities and feedstocks. While we are evaluating third party customers and
suppliers, there can be no assurance that third parties with whom we have a
significant business relationship will successfully test, reprogram, and
replace all of their information technology, manufacturing and operational and
non-information technology systems so that they will continue to properly
function and interface with and support our business operations on a timely
basis. Our approach is to avoid material interruption of core business
operations through the Year 2000 and beyond, while ensuring safe operations and
responsible financial performance. The contingency planning involves
identifying options we can control. Examples are the building of feedstock
inventories and the arranging of alternative supplies. Given the uncertainty in
the Year 2000 problem, we are unable, at this time, to assess the extent and
resulting materiality of the impact of possible Year 2000 failures on our
business, financial condition, results of operations or cash flows. For
example, controlled plant shutdowns using our standard shutdown procedures
might be necessitated by failures of our suppliers or utility providers or by
internal conditions affecting plant operability. Such events could have a
material adverse effect on our business, financial condition, results of
operations or cash flows.

As of March 31, 1999, in accordance with our Year 2000 preparations, we had
spent approximately $156,000 for our PO business and (Pounds)11.4 million for
our petrochemicals, polyurethane chemicals and TiO\\2\\ businesses combined. We
expect to have additional expenses of approximately $4 million for the
remainder of 1999 and in 2000. The costs of our Year 2000 program and the dates
on which we believe we will complete such program are based on our current best
estimates, which were derived using numerous assumptions regarding future
events, including the continued availability of certain resources and the
continued progression toward the implementation of procedures at various
facilities. There can be no assurance that these estimates will prove to be
accurate and, therefore, actual results could differ materially from those
anticipated. Specific factors that could cause material differences with actual
results include, but are not limited to, the results of testing and the
timeliness and effectiveness of remediation efforts of third parties.

BUSINESS

General

We are a leading global manufacturer and marketer of specialty and
commodity chemicals through our four principal businesses: polyurethane
chemicals, propylene oxide, petrochemicals and titanium dioxide. Our company is
characterized by leading market positions; superior low cost operating
capabilities; a high degree of technological expertise; a diversity of
products, end markets and geographic regions served; significant product
integration; and strong growth prospects.

. Our global polyurethane chemicals business is the world's second
largest producer of MDI, and MDI-based polyurethane systems. Our
customers use our products in a wide variety of polyurethane
applications, including automotive interiors, refrigeration and
appliance insulation, construction products, footwear, furniture
cushioning and adhesives.

. Our propylene oxide business is one of three North American producers
of PO. PO is used in a variety of applications, the largest of which is
the production of polyols sold into the polyurethane chemicals market.

. Our petrochemicals business produces olefins and aromatics at world-
scale, highly integrated facilities in northern England. These products
are the key building blocks for the petrochemical industry and are used
in plastic, synthetic fibers, packaging materials and a wide variety of
other applications.

. Our TiO\\2\\ business, which operates under the trade name "Tioxide",
is the largest TiO\\2\\ producer in Europe and the third largest
producer in the world. TiO\\2\\ is a white pigment used to impart
whiteness, brightness and opacity to products such as paints, plastics,
paper, printing inks, synthetic fibers and ceramics.

For the twelve months ended March 31, 1999, we had pro forma revenues of
$3.6 billion, pro forma EBITDA of $424 million and pro forma Adjusted EBITDA of
$483 million (see footnote 2 to "Prospectus Summary--Summary Historical and Pro
Forma Financial Data"). For the year ended December 31, 1998, we derived 54%,
33%, 9% and 4% of our pro forma revenues in Europe, the Americas, Asia and the
rest of the world, respectively. For the year ended December 31, 1998, our
polyurethane chemicals, PO, petrochemicals and TiO\\2\\ businesses represented
37%, 9%, 28% and 26%, respectively, of pro forma revenues.

Polyurethane Chemicals

General

We are one of the leading polyurethane chemicals producers in the world. We
market a complete line of polyurethane chemicals, including MDI, TDI, polyols,
polyurethane systems and aniline, with an emphasis on MDI-based chemicals. We
are the world's second largest producer of MDI and MDI-based polyurethane
systems, with an estimated 24% global MDI market share. Our customers produce
polyurethane products through the combination of an isocyanate, such as MDI or
TDI, with polyols, which are derived largely from PO and ethylene oxide.
Primary polyurethane end-uses include automotive interiors, refrigeration and
appliance insulation, construction products, footwear, furniture cushioning,
adhesives and other specialized engineering applications. According to Chem
Systems, global consumption of MDI was approximately 4.6 billion pounds in
1998, growing from 2.9 billion pounds in 1992, which represents an 8.1%
compound annual growth rate. This high growth rate is the result of the broad
end-uses for MDI and its superior performance characteristics relative to other
polymers.

Our polyurethane chemicals business is widely recognized as an industry
leader in utilizing state-of-the-art application technology to develop new
polyurethane chemical products and

applications. Approximately 30% of our 1998 polyurethane chemicals sales were
generated from products and applications introduced in the last three years.
Our rapid rate of new product and application development has led to a high
rate of product substitution, which in turn has led to MDI sales volume growth
for our business of approximately 9.2% per year over the past 10 years, a rate
in excess of the industry growth rate. Largely as a result of our technological
expertise and history of product innovation, we have enjoyed long-term
relationships with a diverse customer base, including BMW, Weyerhaeuser, Ford,
Nike, Louisiana Pacific, DaimlerChrysler, Whirlpool, Bosch-Siemens and
Electrolux.

We own the world's two largest MDI production facilities, located in
Rozenburg, Netherlands and Geismar, Louisiana, which are back-integrated into
the world's two largest aniline facilities, located in Wilton, U.K. and
Geismar, Louisiana. Since 1996, we have invested over $500 million to
significantly enhance our production capabilities through the rationalization
of our older, less efficient facilities and the modernization of our newer
facilities listed above. According to Chem Systems, we are the lowest cost MDI
producer in the world, largely due to the scale of our operations, our modern
facilities and our back-integration into primary raw materials.

Industry Overview

The polyurethane chemicals industry is a $24 billion global market,
consisting primarily of the manufacture and marketing of MDI, TDI and polyols.
Polyurethane chemicals are used to develop a broad range of products utilized
in many industries, including the appliance, automotive, footwear, furniture,
construction and coatings and adhesives industries. Product applications for
polyurethanes are diverse, including automotive seating, dash boards, steering
wheels, refrigeration and appliance insulation, wood binders, athletic shoe
soles, rollerblade wheels, furniture cushions, adhesives and other specialized
applications.

In 1998, MDI, TDI, polyols and other products, such as specialized
additives and catalysts, accounted for 28%, 17%, 46% and 9% of industry-wide
polyurethane chemicals sales, respectively. MDI is used primarily in rigid
polyurethane foam and other specialty non-foam applications. Conversely, TDI is
used primarily in flexible foam applications that are generally sold as
commodities. Polyols, including polyether and polyester polyols, are used in
conjunction with MDI and TDI in rigid foam, flexible foam and other non-foam
applications. The following chart illustrates the range of product types and
end uses for polyurethane chemicals:

[GRAPH APPEARS HERE]

Polyurethane products are created through the reaction of MDI or TDI with a
polyol. Polyurethane chemicals are sold to customers who react the chemicals to
produce polyurethane products. Depending on their needs, customers will use
either commodity polyurethane chemicals produced for mass sales or specialty
polyurethane chemicals tailored for their specific requirements. By varying the
blend, additives and specifications of the polyurethane chemicals,
manufacturers are able to produce and develop a breadth and variety of
polyurethane products. The following table sets forth information regarding the
three principal polyurethane chemicals markets:

[GRAPH APPEARS HERE]

As reflected in the chart above, MDI has a substantially larger market size
and a higher growth rate than TDI. TDI was the first isocyanate invented and
produced, but it has been steadily replaced by MDI in many applications. MDI's
leadership in the polyurethane chemicals market primarily results from its
ability to be used in a more diverse range of polyurethane applications than
TDI. In addition, because MDI has a lower toxicity than TDI, many polyurethane
product manufacturers have begun substituting MDI for TDI in their products. As
a result, TDI is now used primarily in the production of low-density foam for
furniture and automotive seating cushions, mattresses and inexpensive footwear.
According to Chem Systems, future growth of MDI is expected to be driven by the
continued substitution of MDI for fiberglass and other materials currently used
in insulation foam for construction. Other high growth markets, such as binders
for reconstituted wood board products, are expected to further contribute to
the continued growth of MDI.

MDI. Since 1992, the global consumption of MDI has grown at an average rate
of 8.1%, which exceeds both GDP growth and TDI consumption growth during the
same period. The U.S. and European markets consume the largest quantities of
MDI. We believe the Asian market will become an increasingly important market
for MDI as the market continues to recover from recent macro-economic
difficulties, and the less developed economies in Asia continue to mature.

There are four major producers of MDI: Bayer, Huntsman ICI Chemicals, BASF
and Dow, which have global market shares of 29%, 24%, 19% and 19%,
respectively. We believe it is unlikely that any new major producers of MDI
will emerge due to the substantial requirements for entry such as the limited
availability of licenses for MDI technology and the substantial capital
commitment that is required to develop both the necessary technology and the
infrastructure to manufacture and market MDI.

The price of MDI tends to vary by region and by product type. In the
Americas, where our polyurethane chemicals business is the market leader, the
margin between MDI prices and raw material costs has remained relatively stable
over the last ten years. In Europe, where we have the second largest MDI market
share, these margins have tended to be higher on average but with slightly
greater volatility due to occasional supply and demand imbalances. The
volatility in margins

has been highest in Asia primarily due to the region's status as a net importer
of MDI. As a result, Asia has the most severe excess supply in times of surplus
in the Americas and Europe, and the most severe shortage in times of strong
global demand. Historically, oversupply of MDI has been rapidly absorbed due to
the high growth rate of MDI consumption.

TDI. The TDI market generally grows at a rate consistent with GDP and
exhibits relatively stable prices. The four largest TDI producers supply
approximately 60% of global TDI demand. The consumers of TDI consist primarily
of numerous small producers that manufacture flexible foam blocks sold as
commodities for use as furniture cushions and mattresses. Flexible foam is
typically the first polyurethane market to become established in developing
countries, and, as a result, development of TDI demand typically precedes MDI
demand. Accordingly, as the Asian economy continues to improve, we expect TDI
demand in the developing Asian nations to increase, followed thereafter by
increasing demand for MDI.

Polyols. Polyols are reacted with isocyanates, primarily MDI and TDI, to
produce finished polyurethane products. Approximately 67% of all polyols
produced are used in polyurethane applications. In 1998, approximately 50% of
polyols were used to produce flexible foam blocks sold as commodities and the
remaining 50% were sold as specialty products for use in various applications
that meet the specific needs of individual customers. The creation of a broad
spectrum of polyurethane products is made possible through the different
combinations of the various polyols with MDI, TDI and other isocyanates. The
market for specialty polyols that are reacted with MDI has been growing at
approximately the same rate at which MDI consumption has been growing. The
growth of consumption of commodity polyols has paralleled the growth of global
GDP.

Aniline. Aniline is an intermediate chemical used primarily as a raw
material to manufacture MDI. Approximately 80% of all aniline produced is
consumed by MDI producers, while the remaining 20% is consumed by synthetic
rubber and dye producers. According to Chem Systems, global capacity for
aniline is approximately 4.3 billion pounds per year. Approximately 97% of all
aniline produced is either consumed downstream by the producers of the aniline
or is sold to third parties under long-term, sole supply contracts. The lack of
a significant spot market for aniline means that in order to remain
competitive, MDI manufacturers must either be integrated with an aniline
manufacturing facility or have a long-term cost-competitive aniline supply
contract.

Key Strengths

Our polyurethane chemicals business is characterized by the following
strengths:

. Leading Market Share in an Attractive Industry--We are the world's
second largest producer of MDI and MDI-based polyurethane systems, with
a 24% global MDI market share. Since 1992, global MDI consumption has
grown at an average rate of 8.1% per year. The high growth rate,
relatively stable margins and substantial technological and capital
requirements for entry make the MDI market attractive.

. Technological Leader--We are recognized as an industry leader in
developing new polyurethane chemical products and applications through
the utilization of state-of-the-art application technology.
Approximately 30% of our 1998 sales of polyurethane chemicals were
generated from products and applications introduced in the last three
years. This rapid rate of new product and application development has
led to a high rate of materials substitution, and correspondingly high
MDI sales volume growth of approximately 9.2% per year over the past 10
years, which is in excess of the industry growth rate.

. Low Cost Producer--We are the lowest cost MDI producer in the world,
according to Chem Systems. This is largely due to the scale of our
modern facilities and their back-integration into our primary raw
materials. We own the world's two largest MDI production

facilities, which are back-integrated into the world's two largest
aniline facilities. Since 1996, we have invested over $500 million in
order to significantly enhance our production capabilities through the
rationalization of older, less efficient facilities and the
modernization of newer facilities.

. Strength and Quality of Customer Relationships--Our polyurethane
chemicals business custom blends our products to meet each customer's
specifications. We employ regionally focused and experienced sales
forces and technical support personnel trained to service highly
differentiated end markets. By assisting our customers to overcome
production obstacles at their facilities, we have strengthened our
relationships with them and created new opportunities to develop
products for them.

Strategy

The strategy for our polyurethane chemicals business is based on the
following initiatives:

. Leverage our Technological Expertise for Growth--We intend to leverage
our technological expertise to strengthen our relationships with
existing customers and create opportunities to service new customers
and end-markets. In particular, we are focused on developing products
that will allow us to better serve high-value, high-growth markets such
as the automotive interiors, footwear, and coatings, adhesives,
sealants and elastomers ("CASE") markets.

. Maintain Low Cost Leadership--We will continue to focus on process
innovation and invest in low-cost debottlenecking and process
improvement projects to incrementally expand our facilities and
maintain our low-cost position. In addition to our large-scale capacity
expansions, we have historically been able to increase the capacities
of our existing MDI, aniline and nitrobenzene facilities for minimal
capital investment. We believe that similar opportunities exist within
our newly-modernized asset base, and we intend to identify and capture
these opportunities going forward.

. Capitalize on Product Synergies--We intend to evaluate selective
opportunities to utilize our PO internally to increase the scope and
scale of our specialty polyol offerings at improved profitability. We
believe we will be able to use our PO production in this manner as a
platform for growth in MDI and TDI sales. Additionally, we believe that
by managing our products and technologies together with Huntsman
Corporation's existing polyurethane catalyst, polyol, and amine
technologies, further benefits will be created for our company.

Sales and Marketing

We manage a global sales force at 43 locations with a presence in 32
countries, which sells our polyurethane chemicals to over 2,000 customers in 67
countries. Our sales and technical resources are organized to support major
regional markets, as well as key end-use markets which require a more global
approach. These key end-use markets include the appliance, automotive,
footwear, furniture, construction, binders and CASE industries. Some of our
major customers in these end markets include:

End Market Customers
---------- ---------

Appliances Bosch-Siemens, Electrolux, General Electric, Sharp, Whirlpool
Automotive BMW, DaimlerChrysler, Ford, Collins & Aikman
Footwear Adidas, Nike, Reebok
Binders B.F. Goodrich, Clarks
Construction Louisiana Pacific, Kingspan
CASE Henkel, Marten, Weyerhaeuser
Furniture IKEA, Recticel

Approximately 50% of our polyurethane chemicals sales are in the form of
"systems" in which we provide the total isocyanate and polyol formulation to
our customers in a ready-to-use form. Our ability to supply polyurethane
systems is a critical factor in our overall strategy to offer comprehensive
product solutions to our customers. We have strategically located our polyol
blending facilities, commonly referred to in the chemicals industry as
"systems houses", close to our customers, enabling us to focus on customer
support and technical service. We believe this customer support and technical
service system contributes to customer retention and also provides
opportunities for identifying further product and service needs of customers.
We intend to increase the utilization of our systems houses to produce and
market greater volumes of polyols and MDI polyol blends.

Manufacturing and Operations

Our primary polyurethane chemicals facilities are located at Geismar,
Louisiana, Rozenburg, Netherlands and Wilton, U.K. Our Wilton facility is
currently the largest producer of nitrobenzene and aniline in the world.
Following the completion of an expansion project expected in the fourth
quarter of 1999, the Geismar facility is expected to become the largest
producer of nitrobenzene, aniline and MDI in the world.

The following chart provides information regarding the capacities of our
primary facilities:

Annual Capacities
-------------------------------------------------
Location MDI TDI Polyols Aniline Nitrobenzene
-------- ----- --- ------- ------- ------------
(millions of pounds)

Geismar, Louisiana(a)...... 550(a)(b) 90 150 500(b)(c) 660(b)(c)
Wilton, U.K. .............. 640 880
Rozenburg, Netherlands..... 550 -- 100 -- --
----- --- --- ----- -----
Total.................... 1,100 90 250 1,140 1,540
===== === === ===== =====

- --------
(a) The Geismar facility is owned as follows: we own 100% of the MDI, TDI and
polyol facilities, and Rubicon, Inc., a manufacturing joint venture with
Uniroyal in which we own 50%, owns the aniline and nitrobenzene
facilities. Rubicon is a separate legal entity that operates both the
assets that we own jointly with Uniroyal and our wholly-owned assets at
Geismar.
(b) Following an expansion project that is scheduled to be completed in the
fourth quarter of 1999, the annual capacity of the Geismar facility is
expected to increase to approximately 835 million pounds of MDI, 825
million pounds of aniline and 1,100 million pounds of nitrobenzene.
(c) We have the right to approximately 73% of this capacity under the Rubicon
joint venture arrangements.

Since 1996, we have invested over $500 million to improve and expand our
polyurethane chemicals production facilities. In 1996, we substantially
restructured our manufacturing assets by constructing new world-class aniline
and nitrobenzene production facilities at Wilton, expanding our MDI capacity
at Rozenburg from approximately 200 million pounds per year to approximately
550 million pounds per year and closing our older MDI facility at Hillhouse,
U.K. (approximately 130 million pounds of annual capacity). We effected this
restructuring without increasing our manufacturing fixed cost base.
Subsequently in 1998, we commenced capital projects at our Geismar facility
designed to increase its total production capacity with respect to MDI,
aniline and nitrobenzene. The total budgeted cost for the Geismar facility MDI
expansion is estimated to be $198 million, the majority of which was spent on
or before June 30, 1999. We expect to pursue future plant expansions and
capacity modification projects when justified by market conditions.

We also produce TDI and polyols at our Geismar facility and polyols and
polyol blends at our Rozenburg facility. We manufacture TDI and polyols
primarily to support our MDI customers' requirements. We believe the
combination of our PO business, which produces the major feedstock for
polyols, with our polyols business creates an opportunity to expand our
polyols business and market greater volumes of polyols through our existing
sales network and customer base.

Rubicon Joint Venture. We are a 50% joint venture owner, along with
Uniroyal, of Rubicon, Inc., which owns aniline, nitrobenzene and diphenlylamine
("DPA") manufacturing facilities in Geismar, Louisiana. In addition to
operating our 100% owned MDI, TDI and polyol facilities at Geismar, Rubicon
also operates the jointly-owned aniline, nitrobenzene and DPA facilities and is
responsible for providing other auxiliary services to the entire Geismar
complex. We are entitled to approximately 73% of the nitrobenzene and aniline
production capacity of Rubicon, and Uniroyal is entitled to 100% of the DPA
production. As a result of this joint venture, we are able to achieve greater
scale and lower costs for our products than we would otherwise have been able
to obtain.

Raw Materials. The primary raw materials for polyurethane chemicals are
benzene and PO. Benzene is a widely-available commodity that is the primary
feedstock for the production of MDI. Approximately one-third of the raw
material costs of MDI is attributable to the cost of benzene. Our back-
integration into benzene, nitrobenzene and aniline provides us with a
competitively priced supply of feedstocks and reduces our exposure to supply
interruption. We believe that this back-integration contributes to our status
as the world's lowest cost producer of MDI.

Approximately 60% of the raw material costs of polyols is attributable to
the costs of PO. We believe that the integration of our PO business with our
polyurethane chemicals business will give us access to a competitively priced,
strategic source of PO and the opportunity to further expand into the polyol
market. See "--Propylene Oxide--Industry Overview--PO Market".

Competition

The polyurethane chemicals business is characterized by a small number of
competitors, including BASF, Bayer, Dow and Lyondell. While these competitors
produce various types and quantities of polyurethane chemicals, we focus on MDI
and MDI-based polyurethane systems. We compete based on technological
innovation, technical assistance, customer service, product reliability and
price. In addition, our polyurethane chemicals business also differentiates
itself from its competition in the MDI market in two ways: (1) where price is
the dominant element of competition, our polyurethane chemicals business
differentiates itself by its high level of customer support including
cooperation on technical and safety matters; and (2) elsewhere, we compete on
the basis of product performance and our ability to react to customer needs,
with the specific aim of obtaining new business through the solution of
customer problems.

Propylene Oxide

General

We are one of three North American producers of PO. Our customers process
PO into derivative products such as polyols for polyurethane products,
propylene glycol, which is commonly referred to in the chemicals industry as
"PG", and various other chemical products. End uses for these derivative
products include applications in the home furnishings, construction, appliance,
packaging, automotive and transportation, food, paints and coatings and
cleaning products industries. Our PO business is also the third largest U.S.
marketer of PG which is used primarily to produce unsaturated polyester resins
for bath and shower enclosures and boat hulls, and to produce heat transfer
fluids and solvents. As a co-product of our PO manufacturing process, we also
produce methyl tertiary butyl ether which is commonly referred to in the
chemicals industry as "MTBE". MTBE is an oxygenate that is blended with
gasoline to reduce harmful vehicle emissions and to enhance the octane rating
of gasoline.

began commercial operations in August 1994. According to Chem Systems, we are
the lowest cost PO producer in North America largely due to our proprietary
production process. Since acquiring the facility in 1997, we have increased its
PO capacity by approximately 30% through a series of low cost debottlenecking
and process improvement projects. The current capacity of the PO facility is
approximately 525 million pounds of PO per year. We produce PG under a tolling
arrangement with Huntsman Corporation, which has the capacity to produce
approximately 120 million pounds of PG per year at a neighboring facility.

Industry Overview

PO Market. Demand for PO depends largely on overall economic demand,
especially that of consumer durables. Consumption of PO in the U.S. represents
approximately 40% of global consumption. According to Chem Systems, U.S.
consumption of PO was approximately 3.7 billion pounds in 1998, growing from
2.8 billion pounds in 1992, which represents a 4.9% compound annual growth
rate. The following chart illustrates the primary end markets and applications
for PO, and their respective percentages of total PO consumption:

[GRAPH APPEARS HERE]

Two U.S. producers, Lyondell and Dow, account for approximately 90% of
North American PO production. We believe that Lyondell and Dow consume
approximately 50% and 70%, respectively, of their North American PO production
in their North American downstream operations. Because both Dow and Lyondell
consume large amounts of their PO production in their downstream operations,
and because of the relatively high transportation costs relating to imports,
the development of a merchant PO market has been limited.

MTBE Market. MTBE is an oxygenate that is blended with gasoline to reduce
harmful vehicle emissions and to enhance the octane rating of gasoline.
Historically, the refining industry utilized tetra

ethyl lead as the primary additive to increase the octane rating of gasoline
until health concerns resulted in the removal of tetra ethyl lead from
gasoline. This led to the increasing use of MTBE as a component in gasoline
during the 1980s. U.S. consumption of MTBE, which was approximately 290,000
barrels per day in 1998, has grown at a compound annual rate of 15.2% in the
1990s due primarily to the implementation of federal environmental standards
that require improved gasoline quality through the use of oxygenates. MTBE has
experienced strong growth due to its ability to satisfy the oxygenation
requirement of the Clean Air Act Amendments of 1990 with respect to exhaust
emissions of carbon monoxide and hydrocarbon emissions from automobile engines.
Some regions of the U.S. have adopted this oxygenate requirement to improve air
quality even though they may not be mandated to do so by the Clean Air Act.
While this trend has further increased MTBE consumption, the continued use of
MTBE is becoming increasingly controversial. See "Business--Propylene Oxide--
Recent Developments".

Key Strengths

Our PO business is characterized by the following strengths:

. Low Cost Producer--According to Chem Systems, our proprietary
production process makes us one of the lowest cost producers of PO.
Furthermore, because our Port Neches, Texas facility is less than five
years old, we expect our annual maintenance-related capital
expenditures to be minimal for the next several years.

. Attractive Industry--The U.S. PO market is attractive to existing
manufacturers for a number of reasons, including significant
technological requirements for entry, a limited number of producers in
the U.S. and the stability of PO demand. As a result, producers in the
U.S. PO market have enjoyed relatively stable margins and growth, and
have been able to expand capacity to capture the substantial growth in
the PO market.

. Long-Term Customer Contracts--Currently, we enjoy the benefit of long-
term contracts under which 100% of our annual PO production,
approximately 95% of our annual MTBE production and over 70% of our
annual PG production is sold to various consumers, including Huntsman
Corporation. Additionally, our principal PO contracts are structured to
effectively reduce our exposure to price volatility in propylene, the
principal raw material in PO, by providing for a variable processing
fee plus the market value of propylene consumed in PO production.

. Broad Range of End-Use Products for PO--PO is a versatile chemical used
to produce derivative products for a wide array of end-use applications
in a variety of industries, including the home furnishings,
construction, appliance, packaging, automotive and transportation,
food, paint, CASE and cleaning product industries.

Strategy

The strategy for our PO business is based upon the following:

. Capitalize on Product Synergies--As our existing PO contracts expire,
we intend to evaluate selective opportunities to utilize our PO
internally to increase the scope and scale of our specialty polyol
offerings at improved profitability. We believe we will be able to use
our PO production in this manner as a platform for growth in MDI and
TDI sales.

. Continue to Increase Capacity--Since acquiring our PO facility in 1997,
we have increased our PO capacity by approximately 30% through a series
of low cost debottlenecking and process improvement projects. We
believe further debottlenecking and process improvement opportunities
exist and we will continuously work to implement further low cost
projects in these areas.

Sales and Marketing

We have entered into contractual arrangements with Huntsman Corporation
under which Huntsman Corporation provides us with all of the management, sales,
marketing and production personnel required to operate our PO business. See
"Certain Relationships and Related Transactions". We believe that the extensive
market knowledge and industry experience of the sales executives and technical
experts provided to us by Huntsman Corporation, in combination with our strong
emphasis on customer relationships, has facilitated our ability to establish
and maintain long-term customer contracts. Due to the specialized nature of our
markets, our sales force must possess technical knowledge of our products and
their applications. Our strategy is to continue to increase sales to existing
customers and to attract new customers by providing quality products, reliable
supply, competitive prices and superior customer service.

Based on current production levels, we have entered into long-term
contracts to sell 100% of our PO to customers including BASF, Arch Chemicals,
Inc. and Huntsman Corporation through 2007. Other contracts provide for the
sale of 95% of our annual MTBE production through 1999 to Texaco and BP Amoco,
63% of our annual MTBE production in 2000 to Texaco and 51% of our annual MTBE
production from 2001 through March 2007 to Texaco. In addition, over 70% of our
current annual PG production is sold pursuant to long-term contracts.

Manufacturing and Operations

We manufacture both PO and its co-product, MTBE, at our facility in Port
Neches, Texas. We produce PG under a tolling arrangement with Huntsman
Corporation. Our Port Neches facility has a current capacity of approximately
525 million pounds of PO per year and 260 million gallons of MTBE per year and
the neighboring Huntsman Corporation facility at which our PG is produced has a
capacity of 120 million pounds of PG per year.

We use a proprietary production process to manufacture PO. This technology
was commercialized at our facility in Port Neches, Texas. We own or license all
technology, know-how and patents developed and utilized at this facility.
Technology is a significant requirement for entry into the PO market. Our
process reacts isobutane and oxygen in proprietary oxidation (peroxidation)
reactors, thereby forming tertiary butyl hydroperoxide ("TBHP") and tertiary
butyl alcohol ("TBA"). The TBHP is separated from the TBA using fractionation
techniques. The separated TBHP is further reacted with propylene in the
presence of a proprietary catalyst in epoxidation reactors to form PO and TBA
as a by-product. The PO is separated from the TBA via fractionation and is then
purified for final processing. The TBA produced as a PO by-product is combined
with the TBA from peroxidation and purified by fractionation. We produce MTBE
by reacting the purified TBA with methanol over a catalyst in the MTBE reaction
section of our Port Neches facility. This is a patented one-step reaction which
is unique in the industry because it allows for the direct conversion of the
TBA to MTBE without going through expensive dehydration steps that our
competitors utilize.

While all PO technologies create significant volumes of co-product which
affect the overall profitability of the process, we believe that our technology
possesses several distinct advantages over its alternatives. For example, the
reactors for our PO production process are less expensive relative to other
technologies, and our feedstock and overall investment costs are lower than for
the PO/styrene monomer technology. As compared to the chlorohydrin technology,
our process produces significantly less waste effluent and avoids the disposal
of chlorinated waste products which must be incinerated or used in the
manufacture of chlorinated solvents. Finally, all of our PO co-products can be
processed into saleable materials or used as fuels in our production process.

Raw Materials. The primary raw materials used in our PO production process
are isobutane, propylene, methanol and oxygen, which accounted for 60%, 21%,
15% and 4%, respectively, of total raw material costs in 1998. We purchase our
raw materials primarily under long-term contracts. While

most of these feedstocks are commodity materials generally available to us from
a wide variety of suppliers at competitive prices in the spot market, we
purchase all of the propylene used in the production of our PO from Huntsman
Corporation, through Huntsman Corporation's pipeline, which is the only
propylene pipeline connected to our PO facility.

Recent Developments

The presence of MTBE in some groundwater supplies in California and other
states (primarily due to gasoline leaking from underground storage tanks) and
in surface water (primarily from recreational watercraft) has led to public
concern about MTBE's potential to contaminate drinking water supplies.
Heightened public awareness regarding this issue has resulted in state and
federal initiatives to rescind the federal oxygenate requirements for
reformulated gasoline, including the recent issuance of an executive order in
California seeking to phase-out MTBE by 2002 and the introduction of several
bills in the U.S. Congress that would phase-out or curtail the use of MTBE. In
November 1998, the EPA established a committee to review and provide
recommendations concerning the requirements for oxygenated fuels in the Clean
Air Act. The committee's findings were released to the public on July 27, 1999,
and include, among other things, recommendations that (1) MTBE use be reduced
substantially, (2) the U.S. Congress clarify federal and state authority to
regulate or eliminate gasoline additives that threaten water supplies and (3)
the U.S. Congress amend the Clean Air Act to remove certain of the oxygenated
fuels requirements for reformulated gasoline. In a statement issued in response
to these recommendations on July 26, 1999, the administrator of the EPA stated
that the EPA would work with the U.S. Congress to craft a legislative solution
that would allow for a significant reduction in MTBE use, while maintaining air
quality. On August 4, 1999, the U.S. Senate passed a resolution calling for a
phase out of MTBE. While this resolution has no binding legislative effect,
there can be no assurance that future Congressional action will not result in a
ban or other restrictions on MTBE use. Ongoing debate regarding this issue is
continuing at all levels of federal and state government. Any phase-out of or
prohibition against the use of MTBE in California (in which a significant
amount of MTBE is consumed), in other states, or nationally could result in a
significant reduction in demand for our MTBE. While the environmental benefits
of the inclusion of MTBE in gasoline is widely debated, we believe that there
is no reasonable replacement for MTBE as an octane enhancer and, while its use
may no longer be mandated, we believe that it will continue to be used as an
octane enhancer as long as its use is not prohibited. If demand for MTBE does
decline, we believe that our low cost position will put us in a favorable
position relative to other higher cost sources of MTBE (primarily imports and
on-purpose manufacturing facilities). In the event that there should be a
phase-out, however, we believe we will be able to modify our PO production
process to use our co-product TBA stream to produce saleable products other
than MTBE, though the necessary modifications may require significant capital
expenditures. See "Risk Factors--Pending or future litigation or future
legislative initiatives may subject us to products or environmental liability
or materially adversely affect our MTBE sales".

Competition

Total North American PO production capacity was approximately 5.0 billion
pounds per year as of December 31, 1998, according to Chem Systems. Nearly all
of this capacity is located in the U.S. and controlled by three producers:
Lyondell with a capacity of approximately 2.5 billion pounds per year, Dow with
a capacity of approximately 2.0 billion pounds per year and our company with a
capacity of 525 million pounds per year. We compete based on price, product
performance and service.

Petrochemicals

General

We are a leading, highly-integrated European olefins and aromatics
producer. Olefins, principally ethylene and propylene, are the largest volume
basic petrochemicals and are the key

building blocks from which many other chemicals are made. For example, olefins
are used to manufacture most plastics, resins, adhesives, synthetic rubber and
surfactants which are used in a variety of end-use applications. Aromatics are
basic petrochemicals used in the manufacture of polyurethane chemicals, nylon,
polyester fiber and a variety of plastics.

Our olefins facility at Wilton, U.K. is one of Europe's largest and lowest
cost olefins facilities. Our Wilton facility has the capacity to produce
approximately 1.9 billion pounds of ethylene, 880 million pounds of propylene
and 200 million pounds of butadiene per year. We sell over 84% of our olefins
volume through long-term contracts with Union Carbide, European Vinyls
Corporation (through contractual arrangements with ICI), ICI, Targor, BASF, BP
Chemicals and others and over 80% of our total volume is transported via direct
pipelines to our customers or consumed internally. The Wilton olefins facility
benefits from its feedstock flexibility and superior logistics, which allows
for the processing of naphthas, condensates and LPGs.

Industry Overview

Petrochemical markets are essentially global commodity markets. However,
the olefins market is subject to some regional price differences due to the
limited inter-regional trade resulting from the high costs of product
transportation. The global petrochemicals market is cyclical and is subject to
pricing swings due to supply and demand imbalances, feedstock prices (primarily
driven by crude oil prices) and general economic conditions.

As shown in the following table, both globally and in Western Europe, our
primary market, ethylene is the largest petrochemicals market and paraxylene
has been the fastest growing:

1998 Global Historic
Market size W. Europe as Growth,
(billions of a % of Global W. Europe
Product pounds) Market (1992-1998) Markets Applications
- ---------------------------------------------------------------------------------------

Polyethylene, Packaging
ethylene materials,
oxide, plastics,
Ethylene 177 23% 3.3% polyvinyl housewares,
chloride, beverage
alpha olefins containers,
personal care
- ---------------------------------------------------------------------------------------
Polypropylene, Clothing fibers,
propylene plastics,
Propylene 101 28% 4.5% oxide, automotive parts,
acrylonitrile, foams for bedding &
isopropanol furniture
- ---------------------------------------------------------------------------------------
Polyurethanes, Appliances,
polystyrene, automotive
cyclohexane, components,
Benzene 64 24% 4.2% cumene detergents,
personal care,
packaging
materials, carpet
- ---------------------------------------------------------------------------------------
Polyester, Fibers, textiles,
Paraxylene 29 11% 5.2% purified beverage containers
terephthalic
acid ("PTA")
- ---------------------------------------------------------------------------------------

Source: Chem Systems

In Western Europe, there are 22 producers of ethylene who collectively
operate 53 plants with an annual production capacity of approximately 44.5
billion pounds. No single Western European ethylene producer has a capacity
share greater than 10%. The top three Western European producers of ethylene
are Dow, Enichem and Elf Atochem. Western European ethylene consumption in 1998
is estimated at 42.0 billion pounds, representing an average industry operating
rate of 93%. Propylene capacity in Western Europe is approximately 30 billion
pounds per year. Western European propylene consumption in 1998 is estimated at
28.5 billion pounds, representing an average industry operating rate of 95%.
Olefins capacity in Western Europe has expanded moderately in recent years
primarily through implementation of debottlenecking and process improvement
projects at existing units. No greenfield olefins capacity has been constructed
in Western Europe since 1994. Based upon the three to five year development and
construction cycle for a new olefins plant and the fact that no new olefins
plants have been announced, capacity additions in Western Europe over the next
few years are expected to be limited.

Since 1997, olefins margins have fallen, primarily due to lower economic
growth in Asia and industry overcapacity. Although olefins prices in Western
Europe have risen in recent months as a result of the recovery in crude oil and
other raw material feedstock prices from 1998 lows, margins

have yet to recover. According to Chem Systems the petrochemical industry is at
or near its cyclical trough following a period of oversupply in the last few
years and supply and demand characteristics are expected to improve in coming
years, resulting in improved profitability.

The aromatics market in Western Europe has 27 producers of benzene and 10
producers of paraxylene. Annual Western European benzene production capacity is
approximately 17 billion pounds and consumption was estimated at 15.5 billion
pounds in 1998. The five largest Western European producers of benzene are Dow,
Shell, Huntsman ICI Chemicals, Enichem and Exxon. Paraxylene production
capacity in Western Europe in 1998 was approximately 3.9 billion pounds and
consumption was estimated at 3.1 billion pounds. Demand for paraxylene in
Western Europe is expected to increase as producers of PTA, for which
paraxylene is primarily used, have added capacity in Spain, the Netherlands and
Belgium in the last three years.

Both the benzene and paraxylene markets are currently in a period of
overcapacity. The increasing restrictions imposed by regulatory authorities on
the aromatics content of gasoline in general, and the benzene content in
particular, have affected the supply side of the aromatics industry in recent
years. In 1998, global paraxylene demand fell by 1.2% largely as a result of
the recent Asian economic downturn, while global capacity rose by 15%. As a
result of these dynamics, according Chem Systems, margins in the aromatics
industry, particularly those in paraxylene, are expected to continue to exhibit
characteristic cyclicality and recover from currently depressed cyclical lows
early in the next decade as polyester growth drives a rebalancing of supply and
demand.

Key Strengths

Our petrochemicals business is characterized by the following strengths:

. Raw Material Supply and Integration--Our petrochemicals facilities are
strategically located in northeastern England with pipeline and
waterborne access to the vast hydrocarbon supplies from the North Sea.
The dramatic rise in gas processing in the Teesside area is expected to
provide a growing availability of LPGs and other liquid feedstocks at
favorable prices. We also benefit from internal integration whereby a
local third party refinery and our olefins facility provide a
significant amount of feedstock for our aromatics facilities, which in
turn provides a significant amount of feedstock for our olefins
facility, all of which are transferred via pipeline to minimize
transportation and handling costs.

. Distribution & Storage Infrastructure--We have a unique supporting
infrastructure comprising liquefied ethylene terminals at both
Teesside, U.K. (principally for export) and Wilhelmshaven, Germany (for
import); a propylene terminal at Teesside (principally for export);
extensive cavern storage facilities in the Teesside area for storage of
naphtha and LPG feedstocks, ethylene, propylene, crude butadiene and
hydrogen; extensive above ground storage and jetty facilities to allow
both import and export of feedstocks and products; and an ethylene
pipeline grid linking our facilities to customers in northwestern
England, northeastern England and Grangemouth, Scotland. We believe
such infrastructure assets provide us with a competitive advantage and
will allow us to be creative in the sourcing of raw materials and in
the development and maintenance of strategic customers.

. Low Cost Producer--According to Chem Systems, we are one of the lowest
cost olefins producers in Europe. Our scale of olefins production, the
location of our olefins facility within the larger chemical
manufacturing complex at Wilton and the proximity of all of our
petrochemical facilities to abundant supplies of raw materials provide
significant cost advantages over other European olefins producers.

. Strong Customer Relationships--We have several strong customer
relationships in diverse markets which create attractive outlets for
our products, many of which are linked

via direct pipeline to our facilities. The primary customers for our
ethylene business are European Vinyls Corporation (through contractual
arrangements with ICI), Union Carbide, BP Chemicals and ICI. A large
majority of our propylene is sold via pipeline and waterborne delivery
to Targor for the production of polypropylene both at Wilton and in
continental Europe. Nearly all of our paraxylene production is sold via
pipeline to Dupont for the production of PTA, an intermediate chemical
used in the production of polyester.

Strategy

The strategy of our petrochemicals business is based on the following
initiatives:

. Improve Asset Utilization and Reduce Costs--We plan to continue to
reduce costs and improve production processes through focused
improvement programs. The most recent such program was initiated in
late 1998, with a target of reducing annual costs by $20 million. We
also intend to aggressively pursue additional improvements to operating
efficiencies, thereby increasing asset utilization and further reducing
costs.

. Further Develop Our Customer Base--We intend to leverage Huntsman
Corporation's customer and supplier relationships to further develop
our Western European customer base. Moreover, the olefins and aromatics
businesses have been held for sale by ICI for a significant period of
time and, as a result, we believe new marketing opportunities relative
to these businesses have been limited. We believe that under Huntsman
Corporation management, these opportunities will be created and
captured.

. Reposition the Aromatics Business--We intend to reduce our operating
costs and improve cash flows by repositioning our aromatics business as
an extractor of aromatics as opposed to an on-purpose manufacturer of
aromatics. We have recently formed a strategic alliance with Shell to
purchase substantial volumes of their refinery by-product streams which
are rich in aromatics, and will enable us to close the high cost
reformer unit at our aromatics complex at the North Tees site. The
benefits of this alliance will begin in the fourth quarter of 1999 and
we believe that this will significantly improve the profitability of
our aromatics business.

Sales and Marketing

In recent years, our sales and marketing efforts have focused on developing
long-term contracts with customers to minimize our selling expenses and
administration costs. In 1998, over 80% of our primary petrochemicals sales
were made under long-term contracts. We delivered over 75% of our petrochemical
products in 1998 by pipeline, and we delivered the balance of our products by
road and ship to either the U.K. or export markets, primarily in continental
Western Europe.

Manufacturing and Operations

We produce olefins at our facility in Wilton, U.K. In addition, we own and
operate two integrated aromatics manufacturing facilities at our Wilton and
North Tees sites at Teesside, U.K. Information regarding these facilities is
set forth in the following chart:

Location Product Annual Capacity
-------- ------------- --------------------
(millions of pounds)

Wilton, U.K. ............................. Ethylene 1,900
Propylene 880
Butadiene 200
Paraxylene 730

North Tees, U.K. ......................... Benzene 990
Mixed xylenes 870
Cyclohexane 605
Cumene 275
Ethylbenzene 90

The Wilton olefins facility's flexible feedstock capability, which permits
it to process naphtha, condensates and LPG feedstocks, allows us to take
advantage of favorable feedstock prices arising from seasonal fluctuations or
local availability. According to Chem Systems, the Wilton olefins facility is
one of Europe's most cost efficient olefins manufacturing facilities on a cash
cost of production basis. In addition to our manufacturing operations, we also
operate an extensive logistics operations infrastructure in North Tees. This
infrastructure includes both above and below ground storage facilities, jetties
and logistics services on the River Tees. These operations reduce our raw
material costs by providing greater access and flexibility for obtaining
feedstocks.

In order to reduce costs and improve the cash performance of our aromatics
business, we have recently entered into a supply contract with Shell to
purchase large volumes of refinery by-product streams which are rich in
aromatics. Beginning in the fourth quarter of 1999, we intend to cease
production at our existing aromatics reformer unit and utilize the remaining
assets to extract aromatics from purchased by-product streams and by-product
streams produced at the Wilton olefins facility. As a result of this
arrangement, we expect to realize a significant improvement in the cash
performance of our aromatics business in the near term.

Raw Materials. Teesside, situated on the northeast coast of England, is one
of the most cost effective locations in Europe due to its proximity to the
local supply of oil, gas and chemical feedstocks. Due to our strategic
location, we have the option to purchase feedstocks from a variety of sources.
However, we have elected to procure the majority of our naphtha, condensates
and LPGs from local producers, as they have been the most economical sources.
In order to secure the optimal mix of the required quality and type of
feedstock for our petrochemical operations at fully competitive prices, we
regularly engage in the purchase and sale of feedstocks.

Competition

The markets in which our petrochemicals business operates are highly
competitive. Our competitors in the olefins and aromatics business are
frequently some of the world's largest chemical companies such as BP Amoco,
Dow, Exxon and Shell. The primary factors for competition in this business are
price, service and reliability of supply. The technology used in these
businesses is widely available and licensed, though new entrants must make
significant capital expenditures in order to participate in this market.

Titanium Dioxide

General

Our TiO\\2\\ business, which operates under the tradename "Tioxide", is the
largest manufacturer of TiO\\2\\ in Europe, with an estimated 24% market share,
and the third largest in the world, with an estimated market share of 13%.
TiO\\2\\ is a white pigment used to impart whiteness, brightness and opacity to
products such as paints, plastics, paper, printing inks, synthetic fibers and
ceramics. In addition to its optical properties, TiO\\2\\ possesses traits such
as stability, durability and non-toxicity, making it superior to other white
pigments. According to International Business Management Associates, global
consumption of TiO\\2\\ was approximately 3.5 million tonnes in 1998, growing
from 3.0 million tonnes in 1992, representing a 2.8% compound annual growth
rate which approximates global GDP growth.

We are the second lowest cost TiO\\2\\ producer worldwide, according to
International Business Management Associates. To further enhance our low-cost
position, we have embarked on a comprehensive cost reduction program which has
eliminated approximately $50 million of annualized cash costs since 1996, with
an additional $30 million of annualized savings expected to be achieved by the
end of 2001. As part of this program, we have reduced the number of product
grades we produce, focusing on those with wider applications. This program has
resulted in reduced total plant set-up times and further improved product
quality, product consistency, customer service and profitability.

Industry Overview

Global consumption of TiO\\2\\ was 3.5 million tonnes in 1998 according to
International Business Management Associates. The historical long-term growth
rate for global TiO\\2\\ consumption has been generally consistent with global
GDP growth. Although short-term influences such as customer and producer
stocking and de-stocking activities in response to changes in capacity
utilization and price may distort this trend, over the long-term, GDP growth is
the primary underlying factor influencing growth in TiO\\2\\ demand. The
TiO\\2\\ industry experiences some seasonality in its sales because paint sales
generally peak during the spring and summer months in the northern hemisphere,
resulting in greater sales volumes during the first half of the year.

The global TiO\\2\\ market is characterized by a small number of large
global producers. The TiO\\2\\ industry has six major producers, the top four
of which (DuPont, Millennium Chemicals, Huntsman ICI Chemicals and NL
Industries) account for 64% of the global market share. There has been recent
industry consolidation as large global producers have acquired smaller, local
producers. The TiO\\2\\ industry has substantial requirements for entry,
including proprietary production technology and world scale assets requiring
significant capital investment. No greenfield TiO\\2\\ capacity has been
announced in the last few years. Based upon current price levels and the long
lead times for planning, governmental approvals and construction, additional
greenfield capacity is not expected in the near future. According to
International Business Management Associates, prices of TiO\\2\\ are expected
to be positively affected by limited investment in new capacity.

There are two manufacturing processes for the production of TiO\\2\\, the
sulfate process and the chloride process. Most recent capacity additions have
employed the chloride process technology and, currently, the chloride process
accounts for approximately 58% of global production capacity according to
International Business Management Associates. However, the global distribution
of sulfate and chloride-based TiO\\2\\ capacity varies by region, with the
sulfate process being predominant in Europe, our primary market. The chloride
process is the predominant process used in North America and both processes are
used in Asia. According to International Business Management Associates,
approximately 85% of end-use applications can use pigments produced by either
process.

Key Strengths

Our TiO\\2\\ business is characterized by the following strengths:

. Leading Market Position in an Attractive Industry--We are the largest
TiO\\2\\ producer in Europe, with an estimated 24% market share, and
the third largest producer worldwide, with an estimated 13% market
share. We believe that we are well positioned in an attractive industry
which has high technological and capital requirements for entry,
limited expectations for new greenfield capacity in the near term and
growth rates generally consistent with global GDP.

. Low Cost Producer--According to International Business Management
Associates, our TiO\\2\\ business is the second lowest cost producer in
the world. We achieved this position through our pursuit of process
efficiencies and managed cost reductions, which have resulted in an 11%
decline in our average manufacturing cash costs since 1995.

. Strong Global Reach Through Local Presence--We have a leading market
share in most of the countries in which we manufacture TiO\\2\\,
including the U.K., France, South Africa, Spain, Malaysia and Italy.
The global reach of our TiO\\2\\ business allows us to service both
globally-oriented customers requiring the capacity and reach to meet
their needs on a worldwide basis and local customers who value local
presence.

. Strong Customer Relationships--Through our extensive global sales force
we have a local presence in each of the markets in which we
participate, which contributes to our strong links with major
customers. We have long-term relationships with major customers such as
Akzo Nobel, ICI Paints, PPG and General Electric, who we believe value
our product offerings, local presence and our ability to meet their
worldwide needs.

. Competitive Product Range and Continuing Product Development--Through
incremental improvements to existing products and new product
innovations, we offer a full range of competitive products, including
the leading coatings grade in Europe. Our successful development and
marketing of new grades of TiO\\2\\ has long-term benefits because of
the long life cycle of our products. We also continue to develop new
products to capitalize on market opportunities. For example, we
recently introduced a product grade that we believe has the potential
to be a world leader in the plastics segment, the fastest growing
TiO\\2\\ market.

Strategy

The strategy of our TiO\\2\\ business is based on the following
initiatives:

. Leverage Customer Relationships for Growth--We intend to leverage our
association with Huntsman Corporation, our leading market positions and
our strong customer relationships to expand our customer base. We
believe that our TiO\\2\\ business will also be able to improve the
utilization of our assets by taking advantage of opportunities to
expand

our customer base through increasing sales to manufacturers of paints
and coatings, some of whom may have been previously reluctant to
purchase products from our TiO\\2\\ business when it was solely owned
by ICI, a significant competitor in the paints and coatings industry.

. Improve Asset Utilization and Reliability--We intend to improve our
asset utilization and product quality by continuing to align our
product range with our production capabilities. We will continue to
optimize our number of product lines and emphasize newer "universal"
product lines which can be used across a greater number of
applications. We will also attempt to identify further opportunities
for low cost capacity expansion as justified by market conditions.

. Continue to Improve Cost Structure--We will continue our comprehensive
cost improvement program which concentrates on permanent cost
reduction, improved product quality and increased productivity. This
four year program, currently in its third year, has achieved total
annualized savings of approximately $50 million and has targeted
additional annual savings totaling $30 million. We intend to further
improve our cost competitiveness by aggressively developing and
marketing the co-products of our operations.

Sales and Marketing

Approximately 95% of our TiO\\2\\ sales are made through our direct sales
and technical services network, enabling us to cooperate more closely with our
customers and to respond to our increasingly global customer base. Our
concentrated sales effort and local manufacturing presence have allowed us to
achieve our leading market shares in a number of the countries where we
manufacture TiO\\2\\, including the U.K., France, South Africa, Spain,
Malaysia and Italy.

In addition, we have focused on marketing products to higher growth
industries. For example, we believe that our TiO\\2\\ business is well-
positioned to benefit from the projected growth in the plastics sector, which,
according to International Business Management Associates, is expected to grow
faster than the overall TiO\\2\\ market over the next several years. The table
below summarizes the major end markets for our TiO\\2\\ products and our
representative customers:

% of 1998
End Markets Sales Volume Major Customers
--------------------- ------------ ---------------------------------------

Paints and Coatings.. 58% ICI Paints, Akzo Nobel, PPG, Kalon
Plastics............. 26% Cabot, Schulman, General Electric, Geon
Paper................ 5% Arjo Wiggins, Munskjo
Inks................. 5% BASF/Inmont, Sun/DIC, Converters Ink

Manufacturing and Operations

Our TiO\\2\\ business has nine manufacturing sites in eight countries with
a total estimated capacity of 570,000 tonnes per year (approximately 515,000
tonnes of effective capacity in 1998). Approximately 75% of our TiO\\2\\
capacity is located in Western Europe. Our manufacturing plant in Tracy, Canada
is a "finishing" plant, which finishes products from certain of our other
plants to specific customer requirements. The following table presents
information regarding our TiO\\2\\ facilities:

Region Site Annual Capacity Process
- ------------------------ ----------------------------- --------------- ---------
(tonnes)

Western Europe.......... Calais, France 100,000 Sulfate
Greatham, U.K. 80,000 Chloride
Grimsby, U.K. 80,000 Sulfate
Huelva, Spain 80,000 Sulfate
Scarlino, Italy 80,000 Sulfate

North America........... Lake Charles, Louisiana(1) 60,000(1) Chloride
Tracy, Canada N/A Finishing

Asia.................... Teluk Kalung, Malaysia 50,000 Sulfate

Southern Africa......... Umbogintwini, South Africa(2) 40,000(2) Sulfate
-------
570,000
=======

- --------
(1) This facility is owned and operated by Louisiana Pigment Company, L.P., a
manufacturing joint venture that is owned 50% by us and 50% by Kronos
Louisiana, Inc., a subsidiary of NL Industries, Inc. The capacity shown
reflects our 50% interest in Louisiana Pigment Company.
(2) This facility is owned by Tioxide Southern Africa (Pty) Limited, a company
that is owned 60% by us and 40% by AECI. We operate this facility and are
responsible for marketing 100% of the production.

In recent years, we have invested significant capital to optimize and
modernize our facilities, enhance our production capabilities and maintain
compliance with evolving environmental regulations. We have rationalized our
product range in order to concentrate on product grades that can be used in
multiple applications, yielding benefits in product quality and consistency. As
a result of these programs, our facilities are modern and highly cost-
effective.

Joint Ventures. We own a 50% interest in a manufacturing joint venture
located in Lake Charles, Louisiana. The remaining 50% interest is held by our
joint venture partner Kronos Louisiana, Inc., a wholly-owned subsidiary of NL
Industries, Inc. We share production offtake and operating costs of the plant
equally with Kronos, though we market our share of the production
independently. The operations of the joint venture are under the direction of a
supervisory committee on which each partner has equal representation.

We also own a 60% interest in Tioxide Southern Africa (Pty) Limited, based
in Umbogintwini, near Durban, South Africa. The remaining 40% interest is owned
by AECI, a major South African chemicals and minerals company. We operate this
facility and are responsible for marketing 100% of the production.

Raw Materials. The primary raw materials used to produce TiO\\2\\ are
titanium-bearing ores. There are a limited number of ore suppliers and we
purchase ore under long-term supply contracts. The cost of titanium-bearing
ores has been relatively stable in comparison to TiO\\2\\ prices. Titanium-
bearing ore represents approximately 40% of TiO\\2\\ pigment production costs.

TiO\\2\\ producers extract titanium from ores and process it into
pigmentary TiO\\2\\ using either the chloride or sulfate process. Once an
intermediate TiO\\2\\ pigment has been produced, it is "finished" into a
product with specific performance characteristics for particular end-use
applications. The

finishing process is common to both the sulfate and chloride processes and is a
major determinant of the final product's performance characteristics. The vast
majority of end-use applications can use product from either process.

The sulfate process generally uses less-refined ores which are cheaper to
purchase but produce more co-product than the chloride process. Co-products
from both processes require treatment prior to disposal in order to comply with
environmental regulations. In order to reduce our disposal costs and to
increase our cost competitiveness, we have aggressively developed and marketed
the co-products of our TiO\\2\\ business.

Competition

The global markets in which our TiO\\2\\ business operates are highly
competitive. The primary factors of competition are price, product quality and
service. The TiO\\2\\ industry has recently undergone a consolidation process,
where larger global producers have acquired smaller, regional producers. The
major producers against whom we compete are DuPont, Millennium Chemicals and NL
Industries. Our low production costs, combined with our presence in numerous
local markets, give us a competitive advantage, particularly with respect to
those global customers demanding presence in the various regions in which they
conduct business.

Research and Development

Our PO business spent approximately $4 million, $3 million and $3 million
on research and development for our products in 1996, 1997 and 1998,
respectively. In 1996, 1997 and 1998, an aggregate of approximately (Pounds)51
million, (Pounds)49 million and (Pounds)39 million, respectively, was spent by
our polyurethane chemicals, petrochemicals and TiO\\2\\ businesses for research
and development. We expect to spend a total of $67 million in 1999 and $68
million in 2000 on research and development for all our businesses combined. We
principally conduct our research and development at Huntsman Corporation's
research facilities located in Austin, Texas for our PO business; at our
facilities located in Billingham, England for our TiO\\2\\ business; at our
facilities located in Everberg, Belgium, West Deptford, New Jersey and Sterling
Heights, Michigan for our polyurethane chemicals business and at our facilities
located in Wilton, U.K. for our petrochemicals business. We are engaged at
these research facilities in discovering and developing new processes and test
methods, and applications for existing products to meet the needs of the
marketplace.

Intellectual Property Rights

Proprietary protection of our processes, apparatuses, and other technology
and inventions is important to our businesses. For our PO business, we own
approximately 150 U.S. patents, approximately 10 patent applications (including
provisionals) currently pending at the United States Patent and Trademark
Office, and approximately 525 foreign counterparts, including both issued
patents and pending patent applications. For our TiO\\2\\ business, we have
approximately 50 U.S. patents and pending patent applications, and
approximately 700 foreign counterparts. For our polyurethane chemicals
business, we own approximately 200 U.S. patents and pending patent
applications, and approximately 1,900 foreign counterparts. For our
petrochemicals business, we own five patents and pending applications (both
U.S. and foreign). We also rely upon unpatented proprietary know-how and
continuing technological innovation and other trade secrets to develop and
maintain our competitive position.

In addition to our own patents and patent applications and proprietary
trade secrets and know-how, we have entered into certain licensing arrangements
which authorize us to use certain trade secrets, know-how and related
technology and/or operate within the scope of certain patents owned by other
entities. Our petrochemicals business primarily uses technology licensed from a
number of

suppliers. We have operated several generations of petrochemicals plants and
have accumulated well developed proprietary know-how, some of which is
patented, and technology which we apply to maintain and improve the performance
of our existing asset base. We also license and sub-license certain
intellectual property rights to affiliates and to third parties. In connection
with our transaction with ICI and Huntsman Specialty (under the terms of a
technology transfer agreement and a PO/MTBE technology transfer agreement), we
have licensed back to ICI and Huntsman Corporation (on a non-exclusive basis)
certain intellectual property rights for use in their respective retained
businesses, and ICI and Huntsman Corporation have each licensed certain
retained intellectual property to us.

For our polyurethane chemicals business, we have brand names for a number
of our products, and we own approximately 25 U.S. trademark registrations and
applications for registration currently pending at the United States Patent and
Trademark Office, and approximately 1,200 foreign counterparts, including both
registrations and applications for registration. For our TiO\\2\\ business, we
have approximately 200 trademark registrations and pending applications,
approximately 150 of which relate to the trademark "Tioxide". Our PO business
and petrochemicals business are not dependent on the use of trademarks. We have
entered into a trademark license agreement with each of Huntsman Corporation
and ICI under which we have obtained, respectively, the rights to use the
trademark "Huntsman" and the trademark "ICI", subject to certain restrictions,
including, in the case of the "ICI" mark, that it will only be used as part of
the combination "Huntsman ICI". The license to use the trademark "ICI" expires
on June 30, 2000.

Properties

We own or lease chemical manufacturing and research facilities in the
locations indicated in the list below. We own or lease office space and storage
facilities throughout the U.S. and many foreign countries. Our principal
executive offices, which are leased from Huntsman Corporation, are located at
500 Huntsman Way, Salt Lake City, Utah 84108. The following is a list of our
material owned or leased properties where manufacturing, blending, research and
main office facilities are located.

Location Description of Facility
-------- -----------------------

Geismar, Louisiana................ MDI, TDI, Nitrobenzene(1), Aniline(1) and
Polyols Manufacturing Facilities
Rozenburg, Netherlands(2)......... MDI Manufacturing Facility, Polyols
Manufacturing Facilities and Systems House
Wilton, U.K. ..................... Aniline and Nitrobenzene Manufacturing
Facilities
Shepton Mallet, U.K. ............. Polyester Polyols Manufacturing Facility
Peel, Canada(2)................... Polyurethane Systems House
West Deptford, New Jersey......... Polyurethane Systems House, Research
Facility and U.S. Regional Headquarters
Sterling Heights, Michigan(2)..... Polyurethane Research Facility
Auburn Hills, Michigan(2)......... Polyurethane Office Space and Research
Facility
Cartagena, Colombia............... Polyurethane Systems House
Deggendorf, Germany............... Polyurethane Systems House
Ternate, Italy.................... Polyurethane Systems House
Shanghai, China(2)................ Polyurethane Systems House
Samuprakam, Thailand(2)........... Polyurethane Systems House
Kuan Yin, Taiwan(2)............... Polyurethane Systems House
Everberg, Belgium................. Polyurethane Research Facility, Global
Headquarters and European Headquarters
Gateway West, Singapore........... Polyurethane Regional Headquarters
Port Neches, Texas................ PO Manufacturing Facility
Austin, Texas(2).................. PO/TBA Pilot Plant Facility
Wilton, U.K. ..................... Olefins and Aromatics Manufacturing
Facilities
North Tees, U.K.(2)............... Aromatics Manufacturing Facility
Teesport, U.K.(2)................. Logistics/Storage Facility
Saltholme, U.K. .................. Brine Reservoirs for Cavity Operations
Teesside, U.K..................... Brinefields Cavity Operation and Development
Saltholme, U.K.(2)................ Salt Mines
North Tees, U.K.(2)............... Shipping and Logistics Facility
Grimsby, U.K. .................... TiO\\2\\ Manufacturing Facility
Greatham, U.K. ................... TiO\\2\\ Manufacturing Facility
Calais, France.................... TiO\\2\\ Manufacturing Facility
Huelva, Spain..................... TiO\\2\\ Manufacturing Facility
Scarlino, Italy................... TiO\\2\\ Manufacturing Facility
Teluk Kalung, Malaysia............ TiO\\2\\ Manufacturing Facility
Lake Charles, Louisiana(3)........ TiO\\2\\ Manufacturing Facility
Umbogintwini, South Africa(4)..... TiO\\2\\ Manufacturing Facility
Tracy, Canada..................... TiO\\2\\ Finishing Plant
Billingham, U.K................... TiO\\2\\ Research and Technical Facility

- --------
(1) 50% owned manufacturing joint venture with Uniroyal, Inc.
(2) Leased property.
(3) 50% owned manufacturing joint venture with Kronos Louisiana, Inc., a
subsidiary of NL Industries, Inc.
(4) 60% owned subsidiary.

Employees

We employ over 6,000 people. Approximately 85% of our employees work
outside the U.S. We have over 950 employees located in the U.S., approximately
2,100 employees in the U.K. and 3,200 employees elsewhere most of whom are
subject to collective bargaining agreements. A collective bargaining agreement
for our facility at Scarlino, Italy will be negotiated this year, with a second
collective bargaining agreement at Scarlino to be renegotiated next year.
Overall, we believe that our relations with our employees are good. In
addition, Huntsman Corporation is providing operating, management and
administrative services to us for our PO business similar to the services that
it provided to Huntsman Specialty with respect to the PO business before it was
transferred to us. See "Certain Relationships and Related Transactions".

Environmental Regulations

We are subject to extensive environmental laws. In the ordinary course of
business, we are subject continually to environmental inspections and
monitoring by governmental enforcement authorities. We may incur substantial
costs, including fines, damages, and criminal or civil sanctions, for actual or
alleged violations arising under environmental laws. In addition, our
production facilities require operating permits that are subject to renewal,
modification, and, in certain circumstances, revocation. Our operations involve
the handling, transportation and use of numerous hazardous substances. From
time to time, these operations may result in violations under environmental
laws including spills or other releases of hazardous substances into the
environment. In the event of a catastrophic incident, we could incur material
costs or experience interruption in our operations as a result of addressing
and implementing measures to prevent such incidents in the future. In February
1999, hydrochloric acid was accidentally released from the Greatham facility
into a nearby marsh that includes a conservation area. We have an indemnity
from ICI which we believe will cover, in large measure, our liability for this
matter. In addition, certain notices of violation relating to air emissions and
wastewater issues have been issued to the Port Neches facility. While these
matters remain pending and could result in fines of over $100,000, we do not
believe any of these matters will be material to us. Given the nature of our
business, we cannot assure you, however, that violations of environmental laws
will not result in restrictions imposed on our activities, substantial fines,
penalties, damages or other costs.

Under some environmental laws, we may be jointly and severally liable for
the costs of environmental contamination on or from our properties and at off-
site locations where we disposed of or arranged for the disposal or treatment
of hazardous wastes. For example, in the United States under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, and
similar state laws, a current owner or operator of real property may be liable
for such costs regardless of whether the owner or operator owned or operated
the real property at the time of the release of the hazardous substances and
regardless of whether the release or disposal was in compliance with law at the
time it occurred. In addition, under the United States Resource Conservation
and Recovery Act of 1976, as amended ("RCRA"), and similar state laws, as the
holder of permits to treat or store hazardous wastes, we may, under some
circumstances, be required to remediate contamination at our properties
regardless of when the contamination occurred. Similar laws are being developed
or are in effect to varying degrees in other parts of the world, most notably
in the European Union. For example, in the U.K., a new contaminated land regime
is expected to come into effect shortly which will provide a detailed framework
for the identification, management and remediation of contaminated sites. This
law may increase governmental scrutiny of our U.K. facilities.

We are aware that there is or may be soil or groundwater contamination at
some of our facilities resulting from past operations at these or neighboring
facilities. Based on available information and the indemnification rights that
we possess (including indemnities provided by Huntsman Specialty

and ICI for the facilities that each of them transferred to us), we believe
that the costs to investigate and remediate known contamination will not have a
material adverse effect on our business, financial condition, results of
operations or cash flows; however, we cannot give any assurance that such
indemnities will fully cover the costs of investigation and remediation, that
we will not be required to contribute to such costs or that such costs will not
be material.

We may also incur costs for capital improvements and general compliance
under environmental laws, including costs to acquire, maintain and repair
pollution control equipment. Capital expenditures are planned, for example,
under national legislation implementing the Integrated Pollution Prevention and
Control Directive in the EU. Under this directive the majority of our plants
will, over the next few years, be required to obtain governmental
authorizations which will regulate air and water discharges, waste management
and other matters relating to the impact of operations on the environment, and
to conduct site assessments to evaluate environmental conditions. Although the
implementing legislation in most Member States is not yet in effect, it is
likely that additional expenditures may be necessary in some cases to meet the
requirements of authorizations under this directive. In particular, we believe
that related expenditures to upgrade our wastewater treatment facilities at
several sites may be necessary and associated costs may be material. Wastewater
treatment upgrades unrelated to this initiative also are planned at certain
facilities. In addition, we may also incur material expenditures in complying
with the EU Directive on Hazardous Waste Incineration beyond currently
anticipated expenditures, particularly in relation to our Wilton facility. It
is also possible that additional expenditures to reduce air emissions at two of
our U.K. facilities may be material. Capital expenditures and, to a lesser
extent, costs and operating expenses relating to environmental matters will be
subject to evolving regulatory requirements and will depend on the timing of
the promulgation and enforcement of specific standards which impose
requirements on our operations. Therefore, we cannot assure you that material
capital expenditures beyond those currently anticipated will not be required
under environmental laws. See "Management's Discussion and Analysis of
Financial Conditions and Results of Operations--Environmental Regulation".

Legal Matters

We are a party to various proceedings instituted by governmental
authorities and others arising under provisions of applicable laws, including
various environmental laws. Based in part on the indemnities provided to us by
ICI and Huntsman Specialty in connection with their transfer of businesses to
us and our insurance coverage, we do not believe that the outcome of any of
these matters will have a material adverse effect on our financial condition or
results of operations.

MANAGEMENT

Managers and Executive Officers

Members of our current Board of Managers and executive officers are listed
below. The members of the Board of Managers are appointed by the owner of our
common equity interests and hold office until their successors are duly
appointed and qualified. All officers serve at the pleasure of our Board of
Managers.

Board of Managers and Executive Officers

Name Age Position
- ---- --- --------

Jon M. Huntsman*........ 62 Chairman of the Board of Managers, Chief
Executive Officer and Manager
Jon M. Huntsman, Jr.*... 39 Vice Chairman and Manager
Peter R. Huntsman*...... 36 President, Chief Operating Officer and Manager
Karen H. Huntsman*...... 61 Executive Vice President
J. Kimo Esplin.......... 37 Executive Vice President and Chief Financial
Officer
Patrick W. Thomas....... 41 President--Polyurethane Chemicals Division
Douglas A. L. Coombs.... 57 President--Tioxide Division
Thomas G. Fisher........ 50 Executive Vice President--Tioxide
Michael J. Kern......... 49 Executive Vice President--Manufacturing
Robert B. Lence......... 42 Executive Vice President, General Counsel and
Secretary
Donald J. Stanutz....... 49 Executive Vice President--Polyurethane Chemicals
L. Russell Healy........ 43 Senior Vice President and Financial Director
William M. Chapman, 57
Jr. ................... Vice President--Human Resources
Curtis C. Dowd.......... 39 Vice President--Corporate Development
James A. Huffman*....... 31 Vice President--Strategic Planning
Kevin J. Ninow.......... 36 Vice President--Petrochemicals Manufacturing
Martin F. Petersen...... 38 Vice President and Treasurer
John B. Prows........... 45 Vice President--Petrochemicals
Samuel D. Scruggs....... 39 Vice President--Deputy General Counsel

- --------
* Such persons are related as follows: Karen H. Huntsman is the wife of Jon M.
Huntsman. Jon M. Huntsman and Karen H. Huntsman are the parents of Jon M.
Huntsman, Jr. and Peter R. Huntsman. James A. Huffman is a son-in-law of Jon
M. Huntsman and Karen H. Huntsman and brother-in-law of Jon M. Huntsman, Jr.
and Peter R. Huntsman.

Jon M. Huntsman is Chairman of the Board of Managers and Chief Executive
Officer. He has been Chairman of the Board and Chief Executive Officer of
Huntsman Corporation and all Huntsman companies since he founded his first
company in 1970. In addition, Mr. Huntsman serves or has served on numerous
corporate and industry boards, the Chemical Manufacturers Association and the
American Polymers Council. Mr. Huntsman was selected in 1994 as the chemical
industry's top CEO for all businesses in Europe and North America. Mr.
Huntsman formerly served as Special Assistant to the President of the United
States and as Vice Chairman of the U.S. Chamber of Commerce.

Jon M. Huntsman, Jr. is Vice Chairman and a Manager. Mr. Huntsman, Jr.
serves as Vice Chairman and Director of Huntsman Corporation. Mr. Huntsman
serves on the Board of Directors of Owens-Corning Corporation and on numerous
corporate and not-for-profit boards. Previously, Mr. Huntsman, Jr. was Senior
Vice President and General Manager of Huntsman Chemical Corporation. Later he
served as U.S. Deputy Assistant Secretary of Commerce in the International
Trade Administration, U.S. Deputy Assistant Secretary for East Asia and
Pacific Affairs and as the United States Ambassador to the Republic of
Singapore. Mr. Huntsman, Jr. also serves as President of the Huntsman Cancer
Foundation.

Peter R. Huntsman is President, Chief Operating Officer and a Manager. He
also serves as President, Chief Operating Officer and a Director of Huntsman
Corporation. Previously, Mr. Huntsman was Senior Vice President of Huntsman
Chemical Corporation and a Senior Vice President of Huntsman Packaging
Corporation. Mr. Huntsman also served as Vice President-- Purchasing for
Huntsman Polypropylene Corporation, and Senior Vice President and General
Manager of Huntsman Polypropylene Corporation.

Karen H. Huntsman is Executive Vice President. Mrs. Huntsman performs an
active role in all the Huntsman Corporation businesses and currently serves as
an officer and/or board member for many of the Huntsman companies. By
appointment of the Governor of the State of Utah, Mrs. Huntsman serves as a
member of the Utah State Board of Regents. She also serves on the Boards of
Directors of various corporate and not-for-profit entities, including First
Security Corporation.

J. Kimo Esplin is Executive Vice President and Chief Financial Officer. Mr.
Esplin also serves as Senior Vice President and Chief Financial Officer of
Huntsman Corporation. Previously, Mr. Esplin served as Treasurer of Huntsman
Corporation. Prior to joining Huntsman in 1994, Mr. Esplin was a Vice President
in the Investment Banking Division of Bankers Trust Company, where he worked
for seven years.

Patrick W. Thomas is President--Polyurethane Chemicals Division. Since
joining ICI in 1982, Mr. Thomas has held numerous management positions with
ICI, including Polyurethanes Business Director, Europe from 1993 to 1997,
Polyurethanes International Marketing and Planning Manager from 1991 to 1993
and Polyurethanes Business Engineering & Investment Manager from 1989 to 1991.

Douglas A. L. Coombs is expected to be President--Tioxide Division. Mr.
Coombs currently is Chairman & Chief Executive Officer of Tioxide Group PLC, a
position he has held since 1996. Mr. Coombs has held a number of management
positions with ICI over the last 35 years.

Thomas G. Fisher is Executive Vice President--Tioxide. Mr. Fisher also
serves as Senior Vice President of Huntsman Corporation. Mr. Fisher has held
several positions with Huntsman that have included the overall management for
Huntsman's PO, maleic anhydride, ethylene oxide, ethylene glycol and butadiene
businesses. Prior to joining Huntsman in 1994, Mr. Fisher served in a variety
of management positions with Texaco Chemical Company.

Michael J. Kern is Executive Vice President--Manufacturing. Mr. Kern also
serves as Senior Vice President--Manufacturing for Huntsman Corporation. Prior
to joining Huntsman, Mr. Kern held a variety of positions within Texaco
Chemical Company, including Area Manager--Jefferson County Operations from
April 1993 until joining the Company, Plant Manager of Port Neches facility
from August 1992 to March 1993, Manager of the PO/MTBE project from October
1989 to July 1992, and Manager of Oxides and Olefins from April 1988 to
September 1989.

Robert B. Lence is Executive Vice President, General Counsel and Secretary.
Mr. Lence also serves as Senior Vice President and General Counsel of Huntsman
Corporation. Mr. Lence joined Huntsman in December 1991 from Van Cott, Bagley,
Cornwall & McCarthy, a Salt Lake City law firm, where he was a partner.

Donald J. Stanutz is Executive Vice President--Polyurethane Chemicals. Mr.
Stanutz also serves as Senior Vice President of Huntsman Corporation. Mr.
Stanutz has held several positions with Huntsman that have included the overall
management for Huntsman's performance chemicals business, specialty polymers
business and olefins, oxides and glycols business. Prior to joining Huntsman in
1994, Mr. Stanutz served in a variety of senior positions with Texaco Chemical
Company.

L. Russell Healy is Senior Vice President and Financial Director. Mr. Healy
also serves as Vice President--Finance for Huntsman Corporation. Previously,
Mr. Healy served as Vice President--Taxation for Huntsman Corporation. Prior to
joining Huntsman in 1995, Mr. Healy was a partner in the tax department of
Deloitte and Touche, LLP. Mr. Healy is a CPA and holds a masters degree in
accounting.

William M. Chapman, Jr. is Vice President--Human Resources. Mr. Chapman
also serves as Vice President--Human Resources for Huntsman Corporation.
Previously, Mr. Chapman has served as Vice President--Human Resources for
Huntsman Petrochemical Corporation and as Director--Human Resources for
Huntsman's Jefferson County, Texas operations. Prior to joining Huntsman in
1994, Mr. Chapman was Assistant General Manager--Services for Texaco Chemical
Company.

Curtis C. Dowd is Vice President--Corporate Development. Mr. Dowd also
serves as Vice President--Corporate Development for Huntsman Corporation. Mr.
Dowd previously served as Vice President and General Counsel of Huntsman
Petrochemical Corporation from 1994 to 1998. From 1991 to 1994, Mr. Dowd was an
associate with the law firm of Skadden, Arps, Slate, Meagher & Flom LLP. Prior
to attending law school, Mr. Dowd was a CPA with the accounting firm of Price
Waterhouse for over six years.

James A. Huffman is Vice President--Strategic Planning. Mr. Huffman also
serves as Vice President--Strategic Planning for Huntsman Corporation, a
position which he has held since 1998. Prior to joining Huntsman in 1998, Mr.
Huffman worked for the global management consulting firm of McKinsey & Company
as an engagement manager. Mr. Huffman also worked for Huntsman in a variety of
positions from 1991 to 1994, including Director--New Business Development and
Manager--Credit for Huntsman Packaging.

Kevin J. Ninow is Vice President--Petrochemicals Manufacturing. Since
joining Huntsman in 1989, Mr. Ninow has served in a variety of manufacturing
and engineering positions including Vice President of Manufacturing, Plant
Manager--Oxides and Olefins, Plant Manager--C4's, Operations Manager--C4's,
Manager of Technology, Process Control Group Leader, and Project Engineer.

Martin F. Petersen is Vice President and Treasurer. Mr. Petersen also
serves as Vice President and Treasurer of Huntsman Corporation. Prior to
joining Huntsman in 1997, Mr. Petersen was a Vice President in the Investment
Banking Division of Merrill Lynch & Co., where he worked for seven years.

John B. Prows is Vice President--Petrochemicals. Since joining Huntsman in
1994, Mr. Prows has served as Plant Manager--Polypropylene, Plant Manager--
Polystyrene, and Operations Manager--Styrene Monomer. Previously, Mr. Prows
worked for Dupont for 13 years in a number of management and engineering roles
in polyethylene, PVC and other manufacturing processes.

Samuel D. Scruggs is Vice President--Deputy General Counsel. Mr. Scruggs
also serves as Vice President--Associate General Counsel for Huntsman
Corporation. Prior to joining Huntsman in 1995, Mr. Scruggs was an associate
with the law firm of Skadden, Arps, Slate, Meagher & Flom LLP.

Executive Compensation

Summary of Compensation

The following Summary Compensation Table sets forth information concerning
compensation earned in the fiscal year ended December 31,1998, by our chief
executive officer and our remaining four most highly compensated executive
officers (the "Named Executive Officers") as of the end of the last fiscal
year.

Summary Compensation Table

Annual Compensation(1)(2)
-------------------------
Options
Name and Principal (Number All Other
Position Year Salary Bonus of Shares) Compensation
------------------ ---- -------------------------- ---------- ------------

Jon M. Huntsman,
Chairman of the Board,
Director and Chief
Executive Officer..... 1998 $ 66,000 $ 375,000 -- $44,227(3)

Peter R. Huntsman,
President and
Director.............. 1998 $ 40,170 $ 75,000 -- $11,595(4)

Jon M. Huntsman, Jr.,
Vice Chairman and
Director.............. 1998 $ 32,156 $ 60,000 -- $ 9,216(5)

J. Kimo Esplin,
Senior Vice President
and Chief Financial
Officer............... 1998 $ 18,938 $ 30,000 -- $ 1,233(6)

Robert B. Lence,
Senior Vice President
and General Counsel... 1998 $ 14,479 $ 18,750 -- $ 3,325(7)

- --------
(1) All compensation of the above-named executive officers was paid entirely by
Huntsman Corporation, our parent company; no charge with respect to this
compensation was made to our company. Compensation figures for the
executives listed above represent a prorated percentage of Huntsman
Corporation compensation attributable to services rendered to our company.
(2) Perquisites and other personnel benefits, securities or property are less
than either $50,000 or 10% of the total annual salary and bonus reported
for the named executive officer.
(3) Consists of $8,845 employer's 401(k) contribution for 1998, and employer's
money purchase contribution of $35,382 for 1998.
(4) Consists of $2,319 employer's 401(k) contribution for 1998, and employer's
money purchase contribution of $9,276 for 1998.
(5) Consists of $1,843 employer's 401(k) contribution for 1998, and employer's
money purchase contribution of $7,373 for 1998.
(6) Consists of $986 employer's 401(k) contribution for 1998, and employer's
money purchase contribution of $247 for 1998.
(7) Consists of $665 employer's 401(k) contribution for 1998, and employer's
money purchase contribution of $2,660 for 1998.

The following table shows the estimated annual benefits payable under the
Huntsman Corporation's tax-qualified defined benefit pension plan (the
"Huntsman Corporation Pension Plan") and supplemental pension plan ("SERP") in
specified final average earnings and years-of-service classifications.

Huntsman Corporation Pension Plan Table

Years of Benefit Service at Retirement
Final Average -------------------------------------------------------------
Compensation 5 10 15 20 25 30 35 40
- ------------- ------ ------ ------- ------- ------- ------- ------- -------

$ 25,000 1,800 3,500 5,300 7,000 8,800 10,500 12,300 14,000
$ 50,000 3,500 7,000 10,500 14,000 17,500 21,000 24,500 28,000
$ 75,000 5,300 10,500 15,800 21,000 26,300 31,500 36,800 42,000
$100,000 7,000 14,000 21,000 28,000 35,000 42,000 49,000 56,000
$125,000 8,800 17,500 26,300 35,000 43,800 52,500 61,300 70,000
$150,000 10,500 21,000 31,500 42,000 52,500 63,000 73,500 84,000
$175,000 12,300 24,500 36,800 49,000 61,300 73,500 85,800 98,000
$200,000 14,000 28,000 42,000 56,000 70,000 84,000 98,000 112,000
$300,000 21,000 42,000 63,000 84,000 105,000 126,000 147,000 168,000
$400,000 28,000 56,000 84,000 112,000 140,000 168,000 196,000 224,000
$500,000 35,000 70,000 105,000 140,000 175,000 210,000 245,000 280,000
$600,000 42,000 84,000 126,000 168,000 210,000 252,000 294,000 336,000

The current Huntsman Corporation Pension Plan benefit is based on the
following formula: 1.4% of final average compensation multiplied by years of
credited service, minus 1.4% of estimated Social Security benefits multiplied
by years of credited service (with a maximum of 50% of Social Security
benefits). Final Average compensation is based on the highest average of three
consecutive years of compensation. Messrs. Jon M. Huntsman, Peter R. Huntsman,
Jon M. Huntsman, Jr., J. Kimo Esplin and Robert B. Lence were participants in
the Huntsman Corporation Pension Plan in 1998. For the foregoing named
executive officers, covered compensation consists of base salary and is
reflected in the "Salary" column of the Summary Compensation Table. Federal
regulations require that for the 1998 plan year, no more than $160,000 in
compensation be considered for the calculation of retirement benefits under the
Huntsman Corporation Pension Plan, and the maximum annual benefit paid from a
qualified defined benefit plan cannot exceed $125,000. Benefits are calculated
on a straight life annuity basis. The benefit amounts under the Huntsman
Corporation Pension Plan are offset for Social Security as described above.

The SERP is a nonqualified supplemental pension plan for designated
executive officers, that provides benefits based on certain compensation
amounts not included in the calculation of benefits payable under the Huntsman
Corporation Pension Plan. Messrs. Jon. M. Huntsman, Peter R. Huntsman, Jon M.
Huntsman, Jr., J. Kimo Esplin and Robert B. Lence were participants in the SERP
in 1998. The compensation amounts taken into account for these named executive
officers under the SERP include bonuses (as reflected in the "Bonus" columns of
the summary compensation Table) and base salary in excess of the qualified plan
limitations. The SERP benefit is calculated as the difference between (1) the
benefit determined using the Huntsman Corporation Pension Plan formula with
unlimited base salary plus bonus, and (2) the benefit determined using base
salary as limited by federal regulations.

The number of completed years of credited service as of December 31, 1998
under the Huntsman Corporation Pension Plan and SERP for the named executive
officers participating in the plans were 28, 15, 15, 4 and 13 years for each of
Messrs. Jon. M. Huntsman, Peter R. Huntsman, Jon M. Huntsman, Jr., J. Kimo
Esplin and Robert B. Lence, respectively.

Compensation of Managers

The managers do not receive any additional compensation for their service
as managers.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We share numerous services and resources with Huntsman Corporation and ICI.
We also rely on Huntsman Corporation and ICI to supply some of our raw
materials and to purchase a significant portion of our products.

General

We expect to enter into several agreements with Huntsman Corporation under
which Huntsman Corporation will provide us with administrative support and a
range of services, including treasury and risk management, human resources,
technical and legal services for our businesses in the U.S. and elsewhere. In
connection with these arrangements, we participate in Huntsman Corporation's
worldwide insurance program. Furthermore, we expect to enter into one or more
agreements under which we will provide to Huntsman Corporation a range of
support services, including treasury, human resources, technical and legal
services for Huntsman Corporation's businesses in Europe and elsewhere. These
agreements will provide for fees based on an equitable allocation of the
general and administrative costs and expenses. In addition, we have paid an
aggregate fee of $10 million to cover non-reimbursed expenses incurred in
connection with our transaction with ICI and Huntsman Specialty to Huntsman
Specialty, ICI and the institutional investors in proportion to their common
equity interests in Huntsman ICI Holdings.

Polyurethane Chemicals Business

Supply Contracts

We intend to enter into one or more agreements with ICI for the supply of
caustic soda, chlorine and sulphuric acid to us. We expect the terms and
conditions of these agreements to be substantially the same as agreements or
non-contractual arrangements existing prior to the closing of the transfer of
ICI's businesses to us, which generally reflect market prices.

Utilities Contracts

We intend to enter into several agreements with ICI relating to our supply
of general utilities, including steam, electricity and water to ICI at our
Rozenburg, Netherlands facility. We will also enter into reciprocal agreements
relating to the supply by ICI to us of certain utilities. The terms and
conditions of these agreements to be substantially the same as agreements or
non-contractual arrangements existing prior to the closing of the transfer of
ICI's businesses to us, which generally reflect market prices or prices based
upon cost plus a reasonable fee.

Services Contracts

We intend to enter into one or more agreements with ICI relating to a wide
range of operational services both to and from ICI. These operational services
include the operation and maintenance of various infrastructure, effluent
disposal, storage and distribution assets. We expect the terms of these
agreements to be substantially the same as agreements or non-contractual
arrangements existing prior to the closing of the transfer of ICI's businesses
to us, which generally, reflect market prices or prices based upon cost plus a
reasonable fee.

In addition, we expect to enter into agreements relating to the provision
both to and from ICI of a range of support services for the efficient
transition of business ownership. These services may include various human
resource, occupational health, analytical, engineering or purchasing services.
We expect the terms of these agreements to be substantially the same as
existing agreements or non-contractual arrangements existing prior to the
closing of the transfer of ICI's businesses to us, which generally reflect
market price or prices based upon cost plus a reasonable fee.

PO Business

PO Supply Agreement

Pursuant to an existing agreement with Huntsman Corporation that expires in
2012, we are obligated to sell, and Huntsman Corporation is obligated to buy,
all PO produced at our PO facility in Port Neches, Texas which is not purchased
by our other customers. We are entitled to receive market prices for the PO
purchased by Huntsman Corporation. Based on current market price and the
current commitments of our other customers to purchase our PO, we anticipate
that Huntsman Corporation will spend at least $36 million per year under this
agreement.

Propylene Supply Agreement

Pursuant to an existing agreement that expires in 2012, Huntsman
Corporation is obligated to provide 100% of the propylene required by us for
operation of our PO facility, up to a maximum of 350 million pounds per year.
We pay market prices for the propylene supplied by Huntsman Corporation. These
agreements each have terms of 15 years. Based on current market prices, we
anticipate that we will spend approximately $44 million per year under these
agreements.

Supply Contracts

We are interdependent with Huntsman Corporation with respect to the supply
of certain other feedstock, utilities and products. Under a supply agreement
that expires in 2012, we are required to sell, and Huntsman Corporation is
required to purchase, all of the steam that we generate at our PO facility.
Huntsman Corporation reimburses us for the cost of the steam that it purchases
from us. Under separate supply agreements, we have agreed to purchase our
requirements of mono-ethylene glycol and tri-ethylene glycol from Huntsman
Corporation at market prices for use in our PO operations. Furthermore, in
exchange for Huntsman Corporation's PG tolling services, we pay Huntsman
Corporation a reservation fee, adjusted annually for inflation, plus a variable
toll fee equal to Huntsman Corporation's cost of operating the PG plant. Based
on current market prices, we anticipate that we will spend approximately $5
million per year, and that Huntsman Corporation will spend approximately $6
million per year, under these agreements.

Services Contracts

In order to operate the PO business, we have entered into a series of
contracts with Huntsman Corporation that expire in 2012 under which Huntsman
Corporation operates and maintains the PO facility, including the provision of
management, personnel, transportation, information systems, accounting, tax and
legal services, and research and development to our PO business. Generally,
under these agreements, we pay Huntsman Corporation an amount equal to its
actual costs for providing us with each of these services plus, in some cases,
an additional fee. Based on current market prices, we anticipate that we will
spend approximately $38 million per year under these agreements.

Petrochemicals Business

Naphtha Supply Agreement

We will enter into a product supply agreement with ICI, which will require
ICI to supply and us to buy the entire naphtha output (up to 2.98 billion
pounds per year) of the Phillips Imperial Petroleum Limited refinery at
Teesside and specified amounts of other feedstock available to ICI from
operations at Teesside. This naphtha supply agreement will continue until ICI
is no longer a shareholder in Phillips Imperial Petroleum Limited or until the
refinery is permanently shut down. We will purchase these products on terms and
conditions which reflect market prices.

Supply Contracts

We intend to enter into one or more agreements with ICI for the supply of
ethylene to ICI and the supply of hydrogen to and from ICI. We expect the terms
and conditions of these agreements to be substantially the same as agreements
or non-contractual arrangements existing prior to the closing of the transfer
of ICI's businesses to us, which generally reflect market prices.

Utilities Contracts

We intend to enter into one or more agreements with ICI relating to the
provision of certain utilities, including steam, fuel gas, potable water,
electricity, water and compressed air by us to ICI. We will also enter into
reciprocal agreements relating to the supply by ICI to us of certain utilities.
We expect the terms and conditions of these agreements to be substantially the
same as agreements or non-contractual arrangements existing prior to the
closing of the transfer of ICI's businesses to us, which generally reflect
market prices or prices based upon cost plus a reasonable fee.

Services Contracts

We expect to enter into several agreements with ICI relating to a wide
range of operational services both to and from ICI, primarily at Teesside.
These operational services will include the operation and maintenance of
various infrastructure, effluent disposal, storage, jetty, and distribution
assets. We expect the terms and conditions of these agreements to be
substantially the same as agreements or non-contractual arrangements existing
prior to the closing of the transfer of ICI's businesses to us, which generally
reflect market prices or prices based upon cost plus a reasonable fee.

In addition, we expect to enter into agreements relating to the provision
by ICI to us of a range of support services for the efficient transition of the
change of business ownership. These services may include various human
resources, occupational health, analytical, engineering or purchasing services.
We expect the terms and conditions of these agreements to be substantially the
same as agreements or non-contractual arrangements existing prior to the
closing of the transfer of ICI's businesses to us, which generally reflect
market prices or prices based on cost plus a reasonable fee.

Tioxide Business

Supply Agreement with ICI Paints

We have extended an existing agreement with the paints business of ICI to
supply TiO\\2\\. At the current level of commitment, we supply approximately
60,000 tonnes of TiO\\2\\ per year at market prices. The extended agreement
expires no earlier than June 30, 2001 upon at least twelve months' notice. In
addition, we have entered into a separate agreement to supply ICI with further
quantities of TiO\\2\\ up to a maximum amount of 15,000 tonnes per year at
market prices. Based on current market prices, we anticipate that ICI will
spend approximately $100 million per year under these agreements.

Feedstock Supply Contracts

We have entered into several agreements with ICI for the supply of sulphur
and sulphuric acid to us, and we intend to enter into one or more agreements
with ICI for the supply of caustic soda and chlorine to us. We have also
entered into reciprocal agreements with ICI relating to the supply of certain
products to ICI, including sodium hypochlorite. The terms and conditions of
these new agreements with ICI are, and we expect the terms and conditions of
the proposed agreements with ICI to be, substantially the same as agreements or
non-contractual arrangements existing prior to the closing of the transfer of
ICI's businesses to us, which generally reflect market prices. The

agreements with ICI into which we have already entered have terms of years
and, based on current market prices, we anticipate that we will spend
approximately million per year, and that ICI will spend approximately
million per year, under these existing agreements.

Utilities Contracts

We intend to enter into one or more agreements with ICI relating to the
supply of certain utilities including steam, water and electricity by ICI to us
at Billingham. We also expect to enter into reciprocal agreements relating to
the provision of certain utilities by us to ICI. We expect that the terms and
conditions of these agreements to be substantially the same as agreements or
non-contractual arrangements existing prior to the closing of the transfer of
ICI's businesses to us, which generally reflect market prices or prices based
upon cost plus a reasonable fee.

Services Contracts

We intend to enter into one or more agreements with ICI relating to a wide
range of operational services both to and from ICI. These operational services
will include the operation and maintenance of various infrastructure, effluent
disposal, storage and distribution assets. We expect the terms and conditions
of these agreements to be substantially the same as agreements or non-
contractual arrangements existing prior to the closing of the transfer of ICI's
businesses to us, which generally reflect market prices or prices based upon
cost plus a reasonable fee.

In addition, we intend to enter into agreements relating to the provision
by ICI to us of a range of support services for the efficient transition of
business ownership. These services may include various human resources,
occupational health, analytical, engineering or purchasing services. We expect
the terms and conditions of these agreements to be substantially the same as
agreements or non-contractual arrangements existing prior to the closing of the
transfer of ICI's businesses to us, which generally reflect market prices or
prices based upon cost plus a reasonable fee.

Continuing Arrangements Not Yet Entered Into

Under the contribution agreement, until we are able to agree upon the terms
of the product, supply or utilities agreements described above:

. with respect to (1) the existing supply of any product or utility, or
(2) the supply of any existing service which is material to the
continuing operation of our or ICI's business after closing, we or ICI
may, if we fail to agree on the relevant terms before January 1, 2000,
refer the matter for dispute resolution. Until resolution, the provider
of products, utilities or services will provide the relevant product,
utility or service until June 30, 2001, with the option to terminate
with twelve months' notice at any time after closing. A further twelve
month extension is possible in limited circumstances; and

. with respect to all other existing provisions of product, utilities and
services, we or ICI may, if we fail to agree on the relevant terms
before October 1, 1999, refer the matter for dispute resolution. Until
resolution, the provider of products, utilities or services will
provide the relevant product, utility or service until June 30, 2000,
with the option to terminate with three months' notice at any time
after closing. A further six month extension is possible in limited
circumstances.

If we are unable to agree on the pricing of any product, utility or service
for the period from June 30, 1999 until December 31, 1999, it will be supplied
at the price prevailing at December 31, 1998. For the subsequent twelve month
period an arms-length market price is to be agreed upon, with a price review to
be conducted after each successive twelve month period.

Tax Sharing Arrangement

Pursuant to our Limited Liability Company Agreement and the Limited
Liability Company Agreement of Huntsman ICI Holdings, we have a tax sharing
arrangement with all of our and Huntsman ICI Holdings' common equity holders.
Under the arrangement, because we are treated as a partnership for U.S. income
tax purposes, we will make quarterly payments (with appropriate annual
adjustments) to our parent, Huntsman ICI Holdings, which will in turn make
payments to its common equity holders, in an amount equal to the U.S. federal
and state income taxes we and Huntsman ICI Holdings would have paid had
Huntsman ICI Holdings been a consolidated or unitary group for federal tax
purposes. The arrangement also provides that we will receive cash payments from
the common equity holders (through Huntsman ICI Holdings) in amounts equal to
the amount of U.S. federal and state income tax refunds or benefit against
future tax liabilities equal to the amount we would have received from the use
of net operating losses or tax credits generated by us.

100

DESCRIPTION OF CREDIT FACILITIES

Senior Credit Facilities. In order to fund the closing of the transfer of
ICI's and Huntsman Specialty's businesses to us, we borrowed funds under a
senior secured credit agreement (the "Credit Agreement") with Bankers Trust
Company, as Administrative Agent, Goldman Sachs Credit Partners L.P., The Chase
Manhattan Bank and Warburg Dillon Read LLC, and a group of lenders (the
"Lenders"). Under the Credit Agreement, the Lenders have provided an aggregate
of $2.07 billion of senior secured credit facilities (the "Senior Secured
Credit Facilities"), comprised of:

. a $400 million revolving loan facility,

. a $240 million term A loan facility,

. a $300 million term A loan facility in the euro equivalent of $300
million,

. a $565 million term B loan facility, and

. a $565 million term C loan facility.

In addition, a letter of credit facility of $75 million and a swing line
loan facility of $25 million are available to us as subfacilities under the
revolving loan facility. At the close of business on June 30, 1999, we borrowed
$1.67 billion under the Senior Secured Credit Facilities. The revolving loan
facility is available to us for working capital and general corporate purposes.

Our obligations under the Senior Secured Credit Facilities are supported by
guarantees of Huntsman ICI Holdings LLC, which is our direct parent, our
domestic subsidiaries (other than unrestricted subsidiaries under the Credit
Agreement) and of Tioxide Group and Tioxide Americas Inc., both of which are
non-U.S. subsidiaries that are disregarded as entities for U.S. tax purposes.
We have secured our obligations under the Senior Secured Credit Facilities with
the pledge of substantially all of our assets, including the stock of our
domestic subsidiaries and of Tioxide Group. Our obligations under the Senior
Secured Credit Facilities are also secured by the pledge by Huntsman ICI
Holdings LLC of its membership interests in us, the pledge by the domestic
subsidiary guarantors of their assets, the pledge by Tioxide Group of 65% of
the voting stock of Huntsman ICI (Holdings) U.K. and the pledge by Tioxide
Americas Inc. of its assets, in each case, with specified exceptions. The
Senior Secured Credit Facilities also require that certain intercompany notes
by foreign subsidiaries in favor of Huntsman ICI (Holdings) U.K. be secured.

Both the term A dollar loan facility and the term A euro loan facility
mature on June 30, 2005 and are payable in semi-annual installments commencing
December 31, 2000 with the amortization increasing over time. The term B loan
facility matures on June 30, 2007 and is payable in annual installments of
$5,650,000 commencing June 30, 2000 with the remaining unpaid balance due on
final maturity. The term C loan facility matures on June 30, 2008 and is
payable in annual installments of $5,650,000 commencing June 30, 2000 with the
remaining unpaid balance due on final maturity. The revolving loan facilities
mature on June 30, 2005 with no scheduled commitment reductions.

Interest rates for the Senior Secured Credit Facilities are based upon, at
our option, either the applicable eurocurrency rate (for dollars or euros, as
applicable) adjusted for reserves or the applicable base rate. The applicable
spreads vary based on a pricing grid, in the case of adjusted eurocurrency
based loans, from 1.25% to 3.50% per annum depending on the loan facility and
whether specified conditions have been satisfied and, in the case of the
applicable base rate based loans, from 0.25% to 2.25% per annum.

The Senior Secured Credit Facilities require mandatory prepayments in
specified circumstances involving the incurrence of indebtedness, asset
dispositions where the net cash proceeds are not

101

reinvested in additional assets, a specified percentage of excess cash flow,
specified capital stock offerings, additional specified subordinated
indebtedness and specified purchase price adjustments under the contribution
agreement.

The Senior Secured Credit Facilities contain representations and
warranties, affirmative covenants, financial covenants, negative covenants and
events of default that are usual and customary for facilities similar to the
Senior Secured Credit Facilities. The negative covenants include restrictions,
among others, on the incurrence of indebtedness and liens, dividends and other
distributions, consolidations and mergers, the purchase and sale of assets,
issuance of stock, loans and investments, voluntary payments and modifications
of indebtedness, and affiliate transactions. The financial covenants require us
to maintain financial ratios, including a leverage ratio and an interest
coverage ratio, and minimum consolidated net worth and require us to limit the
amount of our capital expenditures.

102

DESCRIPTION OF NOTES

You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions". In this description, the word
"Huntsman ICI Chemicals" refers only to Huntsman ICI Chemicals LLC and not to
any of its subsidiaries.

The terms of the notes to be issued in the exchange offer are identical in
all material respects to the terms of the outstanding notes, except for the
transfer restrictions relating to the outstanding notes. Any outstanding notes
that remain outstanding after the exchange offer, together with notes issued in
the exchange offer, will be treated as a single class of securities under the
indenture for voting purposes. When we refer to the term "note" or "notes", we
are referring to both the outstanding notes and the notes to be issued in the
exchange offer. When we refer to "holders" of the notes, we are referring to
those persons who are the registered holders of notes on the books of the
registrar appointed under the indenture.

The notes were issued under an indenture, dated June 30, 1999, among
Huntsman ICI Chemicals, the Guarantors and Bank One, N.A., as trustee, in a
private transaction that was not subject to the registration requirements of
the Securities Act. See "Notice to Investors." The terms of the notes include
those stated in the indenture and those made part of the indenture by reference
to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").

The following description is a summary of the material provisions of the
indenture and the registration rights agreement dated June 30, 1999. It does
not restate those agreements in their entirety. We urge you to read the
indenture and the registration rights agreement because they, and not this
description, define your rights as holders of these notes. A copy of the
indenture and registration rights agreement has been filed as an exhibit to the
registration statement which includes this prospectus and is available to you
upon request. See "Where You Can Find More Information".

Brief Description of the Notes and the Guarantees

The Notes

The notes are:

. general unsecured senior subordinated obligations of Huntsman ICI
Chemicals;

. subordinated in right of payment to all existing and future Senior Debt
of Huntsman ICI Chemicals and to all liabilities (including trade
payables) of Huntsman ICI Chemicals's subsidiaries which are not
Guarantors (except to the extent of indebtedness owed to Huntsman ICI
Chemicals or Guarantors);

. equal in right of payment to all existing and senior subordinated
Indebtedness of Huntsman ICI Chemicals;

. senior in right of payment to any subordinated Indebtedness of Huntsman
ICI Chemicals; and

. unconditionally guaranteed by the Guarantors on a senior subordinated
basis.

The Guarantees

As of the date of this prospectus, Tioxide Group, Tioxide Americas Inc. and
Huntsman ICI Financial LLC (the "Guarantors") are our only subsidiaries that
guarantee Huntsman ICI Chemicals's obligations under these notes. The
obligations of the Guarantors under their guarantees are limited as necessary
to minimize the risk that such guarantees would constitute a fraudulent
conveyance

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under applicable law. See "Risk Factors--The Notes and Guarantees may be void,
avoided or subordinated under laws governing fraudulent transfers, insolvency
and financial assistance."

The guarantees of the notes:

. are general unsecured senior subordinated obligations of the
Guarantors;

. are effectively subordinated in right of payment to all existing and
future Senior Debt of the Guarantors,

. are equal in right of payment to all existing and future senior
subordinated Indebtedness of the Guarantors, and

. are senior in right of payment to any subordinated Indebtedness of the
Guarantors.

Assuming we had completed the offering of these notes and applied the net
proceeds as intended, as of December 31,1998, Huntsman ICI Chemicals and the
Guarantors would have had $1,686 million of Senior Debt outstanding, and
Huntsman ICI Chemicals's subsidiaries which are not Guarantors would have had
approximately $13 million of Indebtedness outstanding.

Tioxide Group, Tioxide America Inc. and Huntsman ICI Financial LLC were
incorporated on July 26, 1930, August 11, 1971, and May 19, 1999, respectively.
The address of each of the Guarantors is: c/o Huntsman ICI Chemicals LLC, 500
Huntsman Way, Salt Lake City, Utah 84108.

As of the date of this prospectus, all the subsidiaries of Huntsman ICI
Chemicals are "Restricted Subsidiaries." However, under certain circumstances
we will be permitted to designate certain of our subsidiaries as "Unrestricted
Subsidiaries." Unrestricted Subsidiaries will not be subject to the restrictive
covenants in the indenture.

We and our Domestic Subsidiaries will make investments in our Foreign
Subsidiaries either directly or by advancing funds to Huntsman ICI Financial
LLC or Tioxide Group, each of whom will in turn advance the funds to the
Foreign Subsidiaries, either as a capital contribution or as an intercompany
loan. At July 1, 1999, Huntsman ICI Financial held approximately $1.3 billion
of unsecured indebtedness from our Foreign Subsidiaries. In addition, Huntsman
ICI Holdings (UK) ("Holdings U.K."), a direct wholly owned Restricted
Subsidiary of Tioxide Group, held approximately $700 million of secured
Indebtedness from our Foreign Subsidiaries. However, in the event of a
bankruptcy, liquidation or reorganization of a Foreign Subsidiary, there can be
no assurance that the intercompany loans it owes to Holdings U.K. or Tioxide
Group will not be declared unenforceable, equitably subordinated to other
obligations of such Foreign Subsidiary or recharacterized as equity. In such an
event, creditors of such Foreign Subsidiary will have a prior claim to all
assets of such Foreign Subsidiary.

Subordination

The payment of principal, premium and interest, if any, on these notes is
subordinated to the prior payment in full in cash of all Senior Debt of
Huntsman ICI Chemicals.

The holders of Senior Debt are entitled to receive payment in full in cash
of Obligations due in respect of Senior Debt (including interest after the
commencement of any such proceeding at the rate specified in the applicable
Senior Debt) before the holders of notes are entitled to receive any payment
with respect to the notes (except that holders of notes may receive and retain
Permitted Junior Securities and payments made from the trust described under
"--Legal Defeasance and Covenant Defeasance"), in the event of any distribution
to creditors of Huntsman ICI Chemicals:

(1) in a liquidation or dissolution of Huntsman ICI Chemicals;

104

(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to Huntsman ICI Chemicals or its property;

(3) in an assignment for the benefit of creditors; or

(4) in any marshaling of Huntsman ICI Chemicals' assets and liabilities.

Huntsman ICI Chemicals also may not make any payment in respect of the
notes (except in Permitted Junior Securities or from the trust described under
"--Legal Defeasance and Covenant Defeasance") if:

(1) a payment default on Designated Senior Debt occurs and is continuing
beyond any applicable grace period; or

(2) any other default occurs and is continuing on Designated Senior Debt
that permits holders of the Designated Senior Debt to accelerate its
maturity and the trustee receives a notice of such default (a "Payment
Blockage Notice") from Huntsman ICI Chemicals or the holders of any
Designated Senior Debt.

Payments on the notes may and shall be resumed:

(1) in the case of a payment default, upon the date on which such default
is cured or waived; and

(2) in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the
maturity of any Designated Senior Debt has been accelerated.

No new Payment Blockage Notice may be delivered unless and until 360 days
have elapsed since the effectiveness of the immediately prior Payment Blockage
Notice.

No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the trustee shall be, or be made,
the basis for a subsequent Payment Blockage Notice unless such default shall
have been cured or waived for a period of not less than 180 days.

Huntsman ICI Chemicals must promptly notify holders of Senior Debt if
payment of the notes is accelerated because of an Event of Default.

As a result of the subordination provisions described above, in the event
of a bankruptcy, liquidation or reorganization of Huntsman ICI Chemicals,
holders of these notes may recover less ratably than creditors of Huntsman ICI
Chemicals who are holders of Senior Debt. See "Risk Factors--The notes are
subordinated to senior debt".

Principal, Maturity and Interest of Notes

The notes denominated in dollars are limited in aggregate principal amount
to $600,000,000 and were issued by Huntsman ICI Chemicals in denominations of
$1,000 and integral multiples of $1,000. The notes denominated in euros are
limited in aggregate principal amount to (Euro)200,000,000 and were issued by
Huntsman ICI Chemicals in denominations of (Euro)1,000 and integral multiples
of (Euro)1,000. The notes will mature on July 1, 2009 at the principal amount,
plus accrued and unpaid interest to the maturity date.

Interest on the notes will accrue at the rate of 10.125% per annum and will
be payable semi-annually in arrears on January 1 and July 1, commencing on
January 1, 2000. Huntsman ICI

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Chemicals will make each interest payment to the holders of record of the notes
on the immediately preceding December 15 and June 15.

Interest on the notes will accrue from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.

Optional Redemption

At any time prior to July 1, 2002, Huntsman ICI Chemicals may on any one or
more occasions redeem up to 35% of the aggregate principal amount of the notes
denominated in dollars and/or notes denominated in euros originally issued, at
a redemption price of 110.125% of the principal amount thereof, plus accrued
and unpaid interest to the redemption date, with the net cash proceeds of one
or more Equity Offerings; provided that

(1) at least 65% of the aggregate principal amount of each of the notes
denominated in dollars and notes denominated in euros originally
issued remains outstanding immediately after the occurrence of such
redemption (excluding notes held by Huntsman ICI Chemicals and its
subsidiaries); and

(2) the redemption must occur within 120 days of the date of the closing
of such Equity Offering.

Notice of any such redemption must be given within 90 days after the date
of such Equity Offering. Huntsman ICI Chemicals will publish a copy of such
notice in accordance with the procedures described under "--Notices".

As used in the preceding paragraph, "Equity Offering" means any sale of
Qualified Capital Stock of Huntsman ICI Chemicals or any capital contribution
to the equity of Huntsman ICI Chemicals.

At any time on or prior to July 1, 2004, the notes may be redeemed, in
whole or in part, at the option of Huntsman ICI Chemicals, upon not less than
30 nor more than 60 days' notice, at a redemption price (the "Make-Whole
Price") equal to the greater of (1) 100% of the principal amount thereof or (2)
as determined by an Independent Investment Banker, the present value of (A) the
redemption price of such notes at July 1, 2004 (as set forth below) plus (B)
all required interest payments due on such notes through July 1, 2004
(excluding accrued interest), discounted to the redemption date on a semiannual
basis (assuming a 360-day year consisting of twelve 30-day months) at, in the
case of the notes denominated in dollars, the Adjusted Treasury Rate, and, in
the case of notes denominated in euros, the Adjusted Bund Rate, plus in each
case accrued interest to the redemption date.

"Adjusted Bund Rate" means with respect to any redemption date, the mid-
market yield, under the heading which represents the average for the
immediately prior week, appearing on Reuters page AABBUND01, or its successor,
for the maturity corresponding to July 1, 2009 (if no maturity date is within
three months before or after July 1, 2009, yields for the two published
maturities most closely corresponding to July 1, 2009 shall be determined and
the Bund yield shall be interpolated or extrapolated from such yields on a
straight line basis, rounding to the nearest month), plus 0.50%. The Bund Rate
shall be calculated on the third Business Day preceding such redemption date.

"Adjusted Treasury Rate" means with respect to any redemption date, the
rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a

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price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such redemption
date, plus 0.50%.

"Comparable Treasury Issue" means the United States Treasury Security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining
term of the notes.

"Comparable Treasury Price" means, with respect to any redemption date, (1)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (2) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if
the trustee obtains fewer than three such Reference Treasury Dealer Quotations,
the average of all such Quotations.

"Independent Investment Banker" means any Reference Treasury Dealer
appointed by the trustee after consultation with Huntsman ICI Chemicals.

"Reference Treasury Dealer" means each of Goldman, Sachs & Co., Deutsche
Bank Securities Inc., Chase Securities Inc. and Warburg Dillon Read LLC and
their respective successors; provided, however, that if any of the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), Huntsman ICI Chemicals shall substitute therefor
another Reference Treasury Dealer.

"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average as determined by
the trustee, of the bid and asked prices of the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.

After July 1, 2004, Huntsman ICI Chemicals may redeem all or a part of the
notes upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest thereon, if any, to the applicable redemption date,
if redeemed during the twelve-month period beginning on July 1 of the years
indicated below:

Redemption Redemption
price of notes price of notes
Year denominated in dollars denominated in euros
---- ---------------------- --------------------

2004............................. 105.063% 105.063%
2005............................. 103.375% 103.375%
2006............................. 101.688% 101.688%
2007 and thereafter.............. 100.000% 100.000%

Huntsman ICI Chemicals will publish a redemption notice in accordance with
the procedures described under "--Notices".

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Repurchase at the Option of Holders upon Change of Control

If a Change of Control occurs, each holder of notes will have the right to
require Huntsman ICI Chemicals to repurchase all or any part (equal to $1,000
or (Euro)1,000, as the case may be, or an integral multiple thereof) of that
holder's notes pursuant to the Change of Control Offer. In the Change of
Control Offer, Huntsman ICI Chemicals will offer a Change of Control Payment
in cash equal to 101% of the aggregate principal amount of notes repurchased
plus accrued and unpaid interest thereon, if any, to the date of purchase.
Within 30 days following any Change of Control, Huntsman ICI Chemicals will
mail a notice to each holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase notes on the
Change of Control Payment Date (as defined below) specified in such notice,
pursuant to the procedures required by the indenture and described in such
notice. Huntsman ICI Chemicals will also publish a notice of the offer
repurchase in accordance with the procedures described under "--Notices".
Huntsman ICI Chemicals will comply with the requirements of Rule 14e-1 under
the Exchange Act (or any successor rules) and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable
in connection with the repurchase of the notes as a result of a Change of
Control.

On the Change of Control Payment Date, Huntsman ICI Chemicals will, to the
extent lawful:

(1) accept for payment all notes or portions thereof properly tendered
pursuant to the Change of Control Offer;

(2) deposit with the Principal Paying Agent an amount equal to the Change
of Control Payment in respect of all notes or portions thereof so
tendered; and

(3) deliver or cause to be delivered to the trustee the notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount of notes or portions thereof being purchased by Huntsman ICI
Chemicals.

The Principal Paying Agent will promptly mail to each holder of notes so
tendered the Change of Control Payment for such notes, and the trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each holder a new note equal in principal amount to any unpurchased portion of
the notes surrendered, if any; provided that each such new note will be in the
same currency as the tendered note and in a principal amount of $1,000 or
(Euro)1,000, as the case may be, or an integral multiple thereof.

The provisions described above that require Huntsman ICI Chemicals to make
a Change of Control Offer following a Change of Control are applicable
regardless of whether or not any other provisions of the indenture are
applicable. Except as described above with respect to a Change of Control, the
indenture does not contain provisions that permit the holders of the notes to
require that Huntsman ICI Chemicals repurchase or redeem the notes in the
event of a takeover, recapitalization or similar transaction.

Huntsman ICI Chemicals is required to make a Change of Control Offer upon
a Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the indenture applicable to a Change of Control Offer made by
Huntsman ICI Chemicals and purchases all notes validly tendered and not
withdrawn under such Change of Control Offer.

The definition of "Change of Control" includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of "all or
substantially all" of the assets of Huntsman ICI Chemicals and its
subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
holder of notes to require Huntsman ICI Chemicals to repurchase

108

such notes as a result of a sale, lease, transfer, conveyance or other
disposition of less than all of the assets of Huntsman ICI Chemicals and its
subsidiaries taken as a whole to another Person or group may be uncertain.

The indenture provides that, prior to the mailing of the notice referred to
below, but in any event within 30 days following any Change of Control,
Huntsman ICI Chemicals covenants to:

. repay in full and terminate all commitments under Indebtedness under
the Credit Facilities and all other Senior Debt the terms of which
require repayment upon a Change of Control or offer to repay in full
and terminate all commitments under all Indebtedness under the Credit
Facilities and all other such Senior Debt and to repay the Indebtedness
owed to each lender which has accepted such offer or

. obtain the requisite consents under the Credit Facilities and all other
Senior Debt to permit the repurchase of the notes as provided below.

Huntsman ICI Chemicals shall first comply with the covenant in the
immediately preceding sentence before it shall be required to repurchase notes
pursuant to the provisions described below. Huntsman ICI Chemicals's failure to
comply with the covenant described in the immediately preceding sentence shall
constitute an Event of Default described in clause (3) and not in clause (2)
under "Events of Default" below.

Within 30 days following the date upon which the Change of Control
occurred, Huntsman ICI Chemicals must send, by first class mail, a notice to
each holder of notes, with a copy to the trustee, which notice shall govern the
terms of the Change of Control Offer. Such notice shall state, among other
things, the purchase date, which must be no earlier than 30 days nor later than
60 days from the date such notice is mailed, other than as may be required by
law (the "Change of Control Payment Date"). Huntsman ICI Chemicals will also
publish a notice of the offer to repurchase in accordance with the procedures
described under "--Notices". Holders electing to have a note purchased pursuant
to a Change of Control Offer will be required to surrender the note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the note
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third business day prior to the Change of Control
Payment Date.

Huntsman ICI Chemicals will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the "Change
of Control" provisions of the indenture, Huntsman ICI Chemicals shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under the "Change of Control" provisions of the
indenture by virtue thereof.

Selection and Notice

If less than all of the notes are to be redeemed at any time, the trustee
will select notes for redemption as follows:

. if the notes are listed, in compliance with the requirements of the
principal national securities exchange on which the notes are listed;
or

. if the notes are not so listed, on a pro rata basis, by lot or by such
method as the trustee shall deem fair and appropriate.

No notes of $1,000 or (Euro)1,000, as the case may be, or less shall be
redeemed in part. Notices of redemption shall be mailed by first class mail at
least 30 but not more than 60 days before

109

the redemption date to each holder of notes to be redeemed at its registered
address. Huntsman ICI Chemicals will also publish a notice of redemption in
accordance with the procedures described under "--Notices".

If any note is to be redeemed in part only, the notice of redemption that
relates to that note shall state the portion of the principal amount thereof to
be redeemed. A new note in principal amount equal to the unredeemed portion of
the original note will be issued in the name of the holder thereof upon
cancellation of the original note. Notes called for redemption become due on
the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on notes or portions of them called for redemption.

Certain Covenants

Set forth below are summaries of certain covenants contained in the
indenture.

Limitation on Incurrence of Additional Indebtedness. Huntsman ICI Chemicals
will not, and will not permit any of its Restricted Subsidiaries to, directly
or indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Default or Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
incurrence of any such Indebtedness, Huntsman ICI Chemicals and its Restricted
Subsidiaries which are Guarantors may incur Indebtedness (including, without
limitation, Acquired Indebtedness), and Restricted Subsidiaries which are not
Guarantors may incur Acquired Indebtedness, in each case if on the date of the
incurrence of such Indebtedness, after giving effect to the incurrence thereof,
the Consolidated Fixed Charge Coverage Ratio of Huntsman ICI Chemicals is
greater than 2.0 to 1.0.

Limitation on Restricted Payments. Huntsman ICI Chemicals will not, and
will not cause or permit any of its Restricted Subsidiaries to, directly or
indirectly, (1) declare or pay any dividend or make any distribution (other
than dividends or distributions payable in Qualified Capital Stock of Huntsman
ICI Chemicals) on or in respect of shares of Huntsman ICI Chemicals's Capital
Stock to holders of such Capital Stock, (2) purchase, redeem or otherwise
acquire or retire for value any Capital Stock of Huntsman ICI Chemicals or any
warrants, rights or options to purchase or acquire shares of any class of such
Capital Stock, (3) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund
payment, any Indebtedness of Huntsman ICI Chemicals that is subordinate or
junior in right of payment to the notes or (4) make any Investment (other than
Permitted Investments) (each of the foregoing actions set forth in clauses (1),
(2), (3) and (4) being referred to as a "Restricted Payment"), if at the time
of such Restricted Payment or immediately after giving effect thereto, (A) a
Default or an Event of Default shall have occurred and be continuing or (B)
Huntsman ICI Chemicals is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness" covenant or (C) the
aggregate amount of Restricted Payments (including such proposed Restricted
Payment) made subsequent to June 30, 1999 (the amount expended for such
purposes, if other than in cash, being the fair market value of such property
as determined reasonably and in good faith by the Board of Managers of Huntsman
ICI Chemicals) shall exceed the sum of: (x) 50% of the cumulative Consolidated
Net Income (or if cumulative Consolidated Net Income shall be a loss, minus
100% of such loss) of Huntsman ICI Chemicals earned from June 30, 1999 through
the last day of the last full fiscal quarter immediately preceding the date the
Restricted Payment occurs (the "Reference Date") (treating such period as a
single accounting period); plus (y) 100% of the aggregate net cash proceeds
received by Huntsman ICI Chemicals from any Person (other than a subsidiary of
Huntsman ICI Chemicals) from the

110

issuance and sale subsequent to June 30, 1999 and on or prior to the Reference
Date of Qualified Capital Stock of Huntsman ICI Chemicals (other than Specified
Venture Capital Stock); plus (z) without duplication of any amounts included in
clause (C)(y) above, 100% of the aggregate net cash proceeds of any equity
contribution received by Huntsman ICI Chemicals from a holder of Huntsman ICI
Chemicals' Capital Stock.

Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit:

(1) the payment of any dividend within 60 days after the date of
declaration of such dividend if the dividend would have been permitted
on the date of declaration;

(2) the acquisition of any shares of Capital Stock of Huntsman ICI
Chemicals, either (A) solely in exchange for shares of Qualified
Capital Stock of Huntsman ICI Chemicals or (B) if no Default or Event
of Default shall have occurred and be continuing, through the
application of net proceeds of a substantially concurrent sale for
cash (other than to a subsidiary of Huntsman ICI Chemicals) of shares
of Qualified Capital Stock of Huntsman ICI Chemicals;

(3) the acquisition of any Indebtedness of Huntsman ICI Chemicals that is
subordinate or junior in right of payment to the notes either (A)
solely in exchange for shares of Qualified Capital Stock of Huntsman
ICI Chemicals, or (B) if no Default or Event of Default shall have
occurred and be continuing, through the application of net proceeds of
a substantially concurrent sale or incurrence for cash (other than to
a subsidiary of Huntsman ICI Chemicals) of (x) shares of Qualified
Capital Stock of Huntsman ICI Chemicals or (y) Refinancing
Indebtedness;

(4) so long as no Default or Event of Default shall have occurred and be
continuing, repurchases by Huntsman ICI Chemicals of, or dividends to
Huntsman ICI Holdings to permit repurchases by Huntsman ICI Holdings
of, Common Stock of Huntsman ICI Chemicals or Huntsman ICI Holdings
from employees of Huntsman ICI Chemicals or any of its subsidiaries or
their authorized representatives upon the death, disability or
termination of employment of such employees, in an aggregate amount
not to exceed $4 million in any calendar year;

(5) the redemption or repurchase of any Common Stock of Huntsman ICI
Chemicals held by a Restricted Subsidiary of Huntsman ICI Chemicals
which obtained such Common Stock directly from Huntsman ICI Chemicals;

(6) distributions to the members of Huntsman ICI Chemicals in accordance
with the Tax Sharing Agreement;

(7) payments to Huntsman ICI Holdings for legal, audit, and other expenses
directly relating to the administration of Huntsman ICI Holdings
(including fees and expenses relating to the Huntsman ICI Holdings
Zero Coupon Notes) which when aggregated with loans made to Huntsman
ICI Holdings in accordance with clause (xvii) under the definition of
"Permitted Investments", will not exceed $3.0 million in any fiscal
year;

(8) the payment of consideration by a third party to equity holders of
Huntsman ICI Chemicals;

(9) additional Restricted Payments in an aggregate amount not to exceed
$10 million since June 30, 1999;

(10) payments of dividends on Disqualified Capital Stock issued in
accordance with "Limitation on Incurrence of Additional Indebtedness"
above and

(11) distributions and Investments in connection with our transaction with
ICI and Huntsman Specialty and the financing thereof.

111

In determining the aggregate amount of Restricted Payments made subsequent to
June 30, 1999 in accordance with clause (C) of the immediately preceding
paragraph, cash amounts expended pursuant to clauses (A), (B), and (D) shall be
included in such calculation.

Not later than the date of making any Restricted Payment pursuant to clause
(C) of the second preceding paragraph or clause (9) of the immediately
preceding paragraph, Huntsman ICI Chemicals shall deliver to the trustee an
officers' certificate stating that such Restricted Payment complies with the
indenture and setting forth in reasonable detail the basis upon which the
required calculations were computed, which calculations may be based upon
Huntsman ICI Chemicals' quarterly financial statements last provided to the
trustee pursuant to "--Reports to Holders".

Limitation on Asset Sales. Huntsman ICI Chemicals will not, and will not
permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless
(1) Huntsman ICI Chemicals or the applicable Restricted Subsidiary, as the case
may be, receives consideration at the time of such Asset Sale at least equal to
the fair market value of the assets sold or otherwise disposed of (as
determined in good faith by Huntsman ICI Chemicals' Board of Managers), (2) at
least 75% of the consideration received by Huntsman ICI Chemicals or the
Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the
form of cash or Cash Equivalents (provided that the amount of any liabilities
(as shown on the most recent applicable balance sheet) of Huntsman ICI
Chemicals or any such Restricted Subsidiary (other than liabilities that are by
their terms subordinated to the notes) that are assumed by the transferee of
any such assets shall be deemed to be cash for purposes of this provision) and
is received at the time of such disposition; and (3) upon the consummation of
an Asset Sale, Huntsman ICI Chemicals shall apply, or cause such Restricted
Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within
365 days of receipt thereof either (A) to prepay any Senior Debt, Guarantor
Senior Debt or Indebtedness of a Restricted Subsidiary that is not a Guarantor
and, in the case of any such Indebtedness under any revolving credit facility,
effect a permanent reduction in the availability under such revolving credit
facility, (B) to either (x) make an investment in or expenditures for
properties and assets (including Capital Stock of any entity) that replace the
properties and assets that were the subject of such Asset Sale or in properties
and assets (including Capital Stock of any entity) that will be used in the
business of Huntsman ICI Chemicals and its subsidiaries as existing on June 30,
1999 or in businesses reasonably related thereto ("Replacement Assets") or (y)
the acquisition of all of the capital stock or assets of any Person or division
conducting a business reasonably related to that of Huntsman ICI Chemicals or
its subsidiaries; provided that Net Cash Proceeds in excess of $30 million in
the aggregate since June 30, 1999 from Asset Sales involving assets of Huntsman
ICI Chemicals or a Guarantor (other than the Capital Stock of a Foreign
Subsidiary) shall only be reinvested in (x) assets which will be owned by
Huntsman ICI Chemicals or a Guarantor and not constituting an Investment or (y)
in the capital stock of a Person that becomes a Guarantor, or (C) a combination
of prepayment and investment permitted by the foregoing clauses (3)(A) or
(3)(B). On the 366th day after an Asset Sale or such earlier date, if any, as
the Board of Managers of Huntsman ICI Chemicals or board of directors of such
Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to
such Asset Sale as set forth in clauses (3)(A), (3)(B) or (3)(C) of the next
preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate
amount of Net Cash Proceeds which have not been applied on or before such Net
Proceeds Offer Trigger Date as permitted in clauses (3)(A), (3)(B) and (3)(C)
of the next preceding sentence (each a "Net Proceeds Offer Amount") shall be
applied by Huntsman ICI Chemicals or such Restricted Subsidiary to make an
offer to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer
Payment Date") not less than 30 nor more than 45 days following the applicable
Net Proceeds Offer Trigger Date, from all holders of notes and all holders of
other indebtedness that is pari passu with the notes containing provisions
requiring offers to purchase with the proceeds of sales of assets, on a pro
rata basis, that amount of notes equal to the Net Proceeds Offer Amount at a
price equal to 100% of the principal amount of the notes to be purchased, plus
accrued and unpaid interest thereon, if any, to

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the date of purchase; provided, however, that if at any time any non-cash
consideration received by Huntsman ICI Chemicals or any Restricted Subsidiary
of Huntsman ICI Chemicals, as the case may be, in connection with any Asset
Sale is converted into or sold or otherwise disposed of for cash (other than
interest received with respect to any such non-cash consideration), then such
conversion or disposition shall be deemed to constitute an Asset Sale hereunder
and the Net Cash Proceeds thereof shall be applied in accordance with this
covenant. Huntsman ICI Chemicals shall not be required to make a Net Proceeds
Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to
or in excess of $30 million resulting from one or more Asset Sales, at which
time, the unutilized Net Proceeds Offer Amount, shall be applied as required
pursuant to this paragraph, provided, however, that the first $30 million of
Net Proceeds Offer Amount need not be applied as required pursuant to this
paragraph.

In the event of the transfer of substantially all (but not all) of the
property and assets of Huntsman ICI Chemicals and its Restricted Subsidiaries
as an entirety to a Person in a transaction permitted under "--Merger,
Consolidation and Sale of Assets," and as a result thereof Huntsman ICI
Chemicals is no longer an obligor on the notes, the successor corporation shall
be deemed to have sold the properties and assets of Huntsman ICI Chemicals and
its Restricted Subsidiaries not so transferred for purposes of this covenant,
and shall comply with the provisions of this covenant with respect to such
deemed sale as if it were an Asset Sale. In addition, the fair market value of
such properties and assets of Huntsman ICI Chemicals or its Restricted
Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for
purposes of this covenant.

Notwithstanding the two immediately preceding paragraphs, Huntsman ICI
Chemicals and its Restricted Subsidiaries will be permitted to consummate an
Asset Sale without complying with such paragraphs to the extent (1) at least
80% of the consideration for such Asset Sale constitutes Replacement Assets and
(2) such Asset Sale is for fair market value; provided that any consideration
not constituting Replacement Assets received by Huntsman ICI Chemicals or any
of its Restricted Subsidiaries in connection with any Asset Sale permitted to
be consummated under this paragraph shall constitute Net Cash Proceeds subject
to the provisions of the two preceding paragraphs.

Each Net Proceeds Offer will be mailed to the record holders as shown on
the register of holders within 30 days following the Net Proceeds Offer Trigger
Date, with a copy to the trustee, and shall comply with the procedures set
forth in the indenture. Upon receiving notice of the Net Proceeds Offer,
holders may elect to tender their notes in whole or in part in integral
multiples of $1,000 or (Euro)1,000, as the case may be, in exchange for cash.
To the extent holders properly tender notes in an amount exceeding the Net
Proceeds Offer Amount, notes of tendering holders will be purchased on a pro
rata basis (based on amounts tendered). A Net Proceeds Offer shall remain open
for a period of 20 business days or such longer period as may be required by
law.

Huntsman ICI Chemicals will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Limitation
on Asset Sale" provisions of the indenture, Huntsman ICI Chemicals shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under the "Limitation on Asset Sale" provisions
of the indenture by virtue thereof.

Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. Huntsman ICI Chemicals will not, and will not cause or permit
any of its Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary of
Huntsman ICI Chemicals to (A) pay dividends or make any other distributions on
or in respect of its Capital Stock; (B) make

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loans or advances or to pay any Indebtedness or other obligation owed to
Huntsman ICI Chemicals or any other Restricted Subsidiary of Huntsman ICI
Chemicals; or (C) transfer any of its property or assets to Huntsman ICI
Chemicals or any other Restricted Subsidiary of Huntsman ICI Chemicals, except
for such encumbrances or restrictions existing under or by reason of:

(1) applicable law;

(2) the indenture relating to these notes;

(3) customary non-assignment provisions of any contract or any lease
governing a leasehold interest of Huntsman ICI Chemicals or any
Restricted Subsidiary of Huntsman ICI Chemicals;

(4) any agreements existing at the time of acquisition of any Person or
the properties or assets of the Person so acquired (including
agreements governing Acquired Indebtedness), which encumbrance or
restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person or the properties or
assets of the Person so acquired;

(5) agreements existing on June 30, 1999 to the extent and in the manner
such agreements are in effect on June 30, 1999;

(6) restrictions imposed by any agreement to sell assets or Capital Stock
permitted under the indenture to any Person pending the closing of
such sale;

(7) any agreement or instrument governing Capital Stock of any Person that
is acquired;

(8) Indebtedness or other contractual requirements of a Securitization
Entity in connection with a Qualified Securitization Transaction;
provided that such restrictions apply only to such Securitization
Entity;

(9) Liens incurred in accordance with the covenant described under "--
Limitation on Liens";

(10) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business;

(11) the Credit Facilities;

(12) any restriction under an agreement governing Indebtedness of a
Foreign Subsidiary permitted under "--Limitation on Incurrence of
Additional Indebtedness";

(13) customary restrictions in Capitalized Lease Obligations, security
agreements or mortgages securing Indebtedness of Huntsman ICI
Chemicals or a Restricted Subsidiary to the extent such restrictions
restrict the transfer of the property subject to such Capitalized
Lease Obligations, security agreements or mortgages;

(14) customary provisions in joint venture agreements and other similar
agreements (in each case relating solely to the respective joint
venture or similar entity or the equity interests therein) entered
into in the ordinary course of business;

(15) contracts entered into in the ordinary course of business, not
relating to Indebtedness, and that do not, individually or in the
aggregate, detract from the value of property or assets of Huntsman
ICI Chemicals or any Restricted Subsidiary in any manner material to
Huntsman ICI Chemicals or any Restricted Subsidiary; and

(16) an agreement governing Indebtedness incurred to Refinance the
Indebtedness issued, assumed or incurred pursuant to an agreement
referred to in clause (2), (4), (5), (8), (11), (12) or (13), above;

provided, however, that the provisions relating to such encumbrance or
restriction contained in any such Indebtedness are no less favorable to
Huntsman ICI Chemicals in any material respect as

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determined by the Board of Managers of Huntsman ICI Chemicals in their
reasonable and good faith judgment than the provisions relating to such
encumbrance or restriction contained in agreements referred to in such clause
(2), (4), (5), (8), (11), (12) or (13).

Limitation on Preferred Stock of Restricted Subsidiaries. Huntsman ICI
Chemicals will not permit any of its Restricted Subsidiaries to issue any
Preferred Stock (other than to Huntsman ICI Chemicals or to a Restricted
Subsidiary of Huntsman ICI Chemicals) or permit any Person (other than Huntsman
ICI Chemicals or a Restricted Subsidiary of Huntsman ICI Chemicals) to own any
Preferred Stock of any Restricted Subsidiary of Huntsman ICI Chemicals;
provided, however, that

. Class A Shares and Class B Shares may be issued pursuant to the terms
of the Contribution Agreement;

. any Person which is not a Restricted Subsidiary of Huntsman ICI
Chemicals may issue Preferred Stock to equity holders of such Person in
exchange for equity interests if after such issuance such Person
becomes a Restricted Subsidiary and

. Tioxide Southern Africa (Pty) Limited may issue Preferred Stock to its
equity holders in exchange for its equity interests.

Limitation on Liens. Huntsman ICI Chemicals shall not, and shall not
permit any of its Restricted Subsidiaries to, create, incur or otherwise cause
or suffer to exist or become effective any Liens of any kind upon any property
or assets of Huntsman ICI Chemicals or any Restricted Subsidiary, now owned or
hereafter acquired, which secures Indebtedness pari passu with or subordinated
to the notes unless

. if such Lien secures Indebtedness which is pari passu with the notes,
then the notes are secured on an equal and ratable basis with the
obligations so secured until such time as such obligation is no longer
secured by a Lien or

. if such Lien secures Indebtedness which is subordinated to the notes,
any such Lien shall be subordinated to a Lien granted to the holders of
the notes in the same collateral as that securing such Lien to the same
extent as such subordinated Indebtedness is subordinated to the notes.

Prohibition on Incurrence of Senior Subordinated Debt. Huntsman ICI
Chemicals will not incur or suffer to exist Indebtedness that is senior in
right of payment to the notes and subordinate in right of payment to any other
Indebtedness of Huntsman ICI Chemicals.

Merger, Consolidation and Sale of Assets. Huntsman ICI Chemicals will not,
in a single transaction or series of related transactions, consolidate or merge
with or into any Person, or sell, assign, transfer, lease, convey or otherwise
dispose of (or cause or permit any Restricted Subsidiary of Huntsman ICI
Chemicals to sell, assign, transfer, lease, convey or otherwise dispose of) all
or substantially all of Huntsman ICI Chemicals's assets (determined on a
consolidated basis for Huntsman ICI Chemicals and Huntsman ICI Chemicals's
Restricted Subsidiaries) whether as an entirety or substantially as an entirety
to any Person unless: (A) either (1) Huntsman ICI Chemicals shall be the
surviving or continuing corporation or (2) the Person (if other than Huntsman
ICI Chemicals) formed by such consolidation or into which Huntsman ICI
Chemicals is merged or the Person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition the properties and assets of Huntsman
ICI Chemicals and of Huntsman ICI Chemicals's Restricted Subsidiaries
substantially as an entirety (the "Surviving Entity") (x) shall be an entity
organized and validly existing under the laws of the United States or any State
thereof or the District of Columbia and (y) shall expressly assume, by
supplemental indenture (in form and substance satisfactory to the trustee),
executed and delivered to the trustee, the due and punctual payment of the
principal of, and

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premium, if any, and interest on all of the notes and the performance of every
covenant of the notes and the indenture on the part of Huntsman ICI Chemicals
to be performed or observed; (B) immediately after giving effect to such
transaction and the assumption contemplated by clause (A)(2)(y) above
(including giving effect to any Indebtedness and Acquired Indebtedness incurred
or anticipated to be incurred in connection with or in respect of such
transaction), Huntsman ICI Chemicals or such Surviving Entity, as the case may
be, shall be able to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to the "--Limitation on Incurrence of
Additional Indebtedness" covenant; (C) immediately before and immediately after
giving effect to such transaction and the assumption contemplated by clause
(A)(2)(y) above (including, without limitation, giving effect to any
Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred
and any Lien granted in connection with or in respect of the transaction), no
Default or Event of Default shall have occurred or be continuing; and (D)
Huntsman ICI Chemicals or the Surviving Entity shall have delivered to the
trustee an officers' certificate and an opinion of counsel, each stating that
such consolidation, merger, sale, assignment, transfer, lease, conveyance or
other disposition and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture comply with the applicable
provisions of the indenture and that all conditions precedent in the indenture
relating to such transaction have been satisfied.

The indenture provides that upon any consolidation, combination or merger
or any transfer of all or substantially all of the assets of Huntsman ICI
Chemicals in accordance with the foregoing, in which Huntsman ICI Chemicals is
not the continuing corporation, the successor Person formed by such
consolidation or into which Huntsman ICI Chemicals is merged or to which such
conveyance, lease or transfer is made shall succeed to, and be substituted for,
and may exercise every right and power of, Huntsman ICI Chemicals under the
indenture and the notes with the same effect as if such surviving entity had
been named as such.

Each Guarantor (other than any Guarantor whose guarantee is to be released
in accordance with the terms of the guarantee and the indenture in connection
with any transaction complying with the provisions of "--Limitation on Asset
Sales") will not, and Huntsman ICI Chemicals will not cause or permit any
Guarantor to, consolidate with or merge with or into any Person other than
Huntsman ICI Chemicals or any other Guarantor unless: (1) the entity formed by
or surviving any such consolidation or merger (if other than the Guarantor) or
to which such sale, lease, conveyance or other disposition shall have been made
assumes by supplemental indenture all of the obligations of the Guarantor on
the guarantee; (2) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and (3)
immediately after giving effect to such transaction and the use of any net
proceeds therefrom on a pro forma basis, Huntsman ICI Chemicals could satisfy
the provisions of clause (2) of the first paragraph of this covenant. Any
merger or consolidation of a Guarantor with and into Huntsman ICI Chemicals
(with Huntsman ICI Chemicals being the surviving entity) or another Guarantor
need not comply with the first paragraph of this covenant.

Notwithstanding anything in this section to the contrary, (1) Huntsman ICI
Chemicals may merge with an Affiliate that has no material assets or
liabilities and that is incorporated or organized solely for the purpose of
reincorporating or reorganizing Huntsman ICI Chemicals in another state of the
United States or the District of Columbia without complying with clause (B) of
the first paragraph of this covenant and (2) any transaction characterized as a
merger under applicable state law where each of the constituent entities
survives, shall not be treated as a merger for purposes of this covenant, but
shall instead be treated as (A) an Asset Sale, if the result of such
transaction is the transfer of assets by Huntsman ICI Chemicals or a Restricted
Subsidiary, or (B) an Investment, if the result of such transaction is the
acquisition of assets by Huntsman ICI Chemicals or a Restricted Subsidiary.

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Limitations on Transactions with Affiliates. (A) Huntsman ICI Chemicals
will not, and will not permit any of its Restricted Subsidiaries to, directly
or indirectly, enter into or permit to exist any transaction or series of
related transactions (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates (each an "Affiliate Transaction"), other than
(1) Affiliate Transactions permitted under paragraph (B) below and (2)
Affiliate Transactions on terms that are no less favorable than those that
might reasonably have been obtained in a comparable transaction at such time on
an arm's-length basis from a Person that is not an Affiliate of Huntsman ICI
Chemicals or such Restricted Subsidiary. All Affiliate Transactions (and each
series of related Affiliate Transactions which are similar or part of a common
plan) involving aggregate payments or other property with a fair market value
in excess of $5 million shall be approved by the Board of Managers of Huntsman
ICI Chemicals or board of directors of such Restricted Subsidiary, as the case
may be, such approval to be evidenced by a board resolution stating that such
Board of Managers or board of directors has determined that such transaction
complies with the foregoing provisions. If Huntsman ICI Chemicals or any
Restricted Subsidiary of Huntsman ICI Chemicals enters into an Affiliate
Transaction (or a series of related Affiliate Transactions related to a common
plan) that involves an aggregate fair market value of more than $10 million,
Huntsman ICI Chemicals or such Restricted Subsidiary, as the case may be,
shall, prior to the consummation thereof, obtain a favorable opinion as to the
fairness of such transaction or series of related transactions to Huntsman ICI
Chemicals or the relevant Restricted Subsidiary, as the case may be, from a
financial point of view, from an Independent Financial Advisor and file the
same with the trustee.

(B) The restrictions set forth in clause (A) do not apply to (1) reasonable
fees and compensation paid to and indemnity provided on behalf of, officers,
directors, manager, employees or consultants of Huntsman ICI Chemicals or any
Restricted Subsidiary of Huntsman ICI Chemicals as determined in good faith by
Huntsman ICI Chemicals' Board of Managers or senior management; (2)
transactions exclusively between or among Huntsman ICI Chemicals and any of its
Restricted Subsidiaries or exclusively between or among such Restricted
Subsidiaries, provided such transactions are not otherwise prohibited by the
indenture; (3) any agreement as in effect as of June 30, 1999 or contemplated
under the contribution agreement or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) in any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the holders in any material respect
than the original agreement; (4) Permitted Investments and Restricted Payments
made in compliance with "--Limitation on Restricted Payments"; (5) transactions
between or among any of Huntsman ICI Chemicals, any of its subsidiaries and any
Securitization Entity in connection with a Qualified Securitization
Transaction, in each case provided that such transactions are not otherwise
prohibited by the indenture; and (6) transactions with distributors or other
purchases or sales of goods or services, in each case in the ordinary course of
business and otherwise in compliance with the terms of the indenture which when
taken together are fair to Huntsman ICI Chemicals or the Restricted
Subsidiaries as applicable, in the reasonable determination of the Board of
Managers of Huntsman ICI Chemicals or the senior management thereof, or are on
terms at least as favorable as might reasonably have been obtained at such time
from an unaffiliated party.

Limitation of Guarantees by Restricted Subsidiaries. Huntsman ICI Chemicals
will not permit any of its Restricted Subsidiaries, directly or indirectly, by
way of the pledge of any intercompany note or otherwise, to assume, guarantee
or in any other manner become liable with respect to any Indebtedness of
Huntsman ICI Chemicals or any other Restricted Subsidiary (other than (A)
Indebtedness under Currency Agreements in reliance on clause (5) of the
definition of "Permitted Indebtedness", (B) Interest Swap Obligations and
Commodity Agreements incurred in reliance on clause (4) of the definition of
"Permitted Indebtedness" or (C) any guarantee by a Foreign Subsidiary of
Indebtedness of another Foreign Subsidiary permitted under "--Limitation on

117

Incurrence of Additional Indebtedness"), unless, in any such case (1) such
Restricted Subsidiary that is not a Guarantor executes and delivers a
supplemental indenture to the indenture, providing a guarantee of payment of
the notes by such Restricted Subsidiary and (2) (x) if any such assumption,
guarantee or other liability of such Restricted Subsidiary is provided in
respect of Senior Debt, the guarantee or other instrument provided by such
Restricted Subsidiary in respect of such Senior Debt may be superior to the
guarantee pursuant to subordination provisions no less favorable in any
material respect to the holders than those contained in the indenture and (y)
if such assumption, guarantee or other liability of such Restricted Subsidiary
is provided in respect of Indebtedness that is expressly subordinated to the
notes, the guarantee or other instrument provided by such Restricted Subsidiary
in respect of such subordinated Indebtedness shall be subordinated to the
guarantee pursuant to subordination provisions no less favorable in any
material respect to the holders than those contained in the indenture.

Notwithstanding the foregoing, any such guarantee by a Restricted
Subsidiary of the notes shall provide by its terms that it shall be
automatically and unconditionally released and discharged, without any further
action required on the part of the trustee or any holder, upon: (1) the
unconditional release of such Restricted Subsidiary from its liability in
respect of the Indebtedness in connection with which such guarantee was
executed and delivered pursuant to the preceding paragraph; or (2) any sale or
other disposition (by merger or otherwise) to any Person which is not a
Restricted Subsidiary of Huntsman ICI Chemicals of all of the Capital Stock in,
or all or substantially all of the assets of, such Restricted Subsidiary or the
parent of such Restricted Subsidiary; provided that (A) such sale or
disposition of such Capital Stock or assets is otherwise in compliance with the
terms of the indenture and (B) such assumption, guarantee or other liability of
such Restricted Subsidiary has been released by the holders of the other
Indebtedness so guaranteed or (3) such Guarantor becoming an Unrestricted
Subsidiary in accordance with the indenture.

Capital Stock of Certain Subsidiaries. Huntsman ICI Chemicals will at all
times hold directly, or indirectly through a wholly owned Restricted
Subsidiary, (1) all issued and outstanding Capital Stock of Tioxide Group,
other than shares of Class A Shares issued pursuant to the terms of the
contribution agreement, which will be held by an ICI Affiliate and (2) all
issued and outstanding Capital Stock of Holdings U.K., other than shares of
Class B Shares issued pursuant to the terms of the Contribution Agreement,
which will be held by a Huntsman Affiliate. Neither Tioxide Group nor Holdings
U.K. will issue any Capital Stock (or any direct or indirect rights, options or
warrants to acquire such Capital Stock) to any Person other than Huntsman ICI
Chemicals or a wholly owned Restricted Subsidiary of Huntsman ICI Chemicals
except to qualify directors if required by applicable law or other similar
legal requirements and the Class A Shares and Class B Shares described in the
preceding sentence. Tioxide Group will not make any direct or indirect
distribution with respect to its Capital Stock to any Person other than
Huntsman ICI Chemicals or a wholly owned Restricted Subsidiary of Huntsman ICI
Chemicals except that after the UK Holdco Notes have been paid in full,
dividends may be paid on the Class A Shares of Tioxide Group in an amount not
to exceed 1% of the dividends paid by Tioxide Group. Holdings U.K. will not
make any direct or indirect distribution with respect to its Capital Stock to
any Person other than Huntsman ICI Chemicals or a wholly owned Restricted
Subsidiary of Huntsman ICI Chemicals and other than nominal dividends on the
Class B Shares.

Conduct of Business. Huntsman ICI Chemicals and its Restricted Subsidiaries
(other than a Securitization Entity) will not engage in any businesses which
are not the same, similar or related to the businesses in which Huntsman ICI
Chemicals and its Restricted Subsidiaries were engaged on June 30, 1999, except
to the extent that after engaging in any new business, Huntsman ICI Chemicals
and its Restricted Subsidiaries, taken as a whole, remain substantially engaged
in similar lines of business as were conducted by them on June 30, 1999.
Huntsman ICI Financial shall only conduct the business of holding Indebtedness
of Restricted Subsidiaries of Huntsman ICI Chemicals

118

and shall not incur or be liable for any Indebtedness other than guarantees
otherwise permitted under the indenture. Tioxide Group shall only conduct the
business of holding the equity interests in Restricted Subsidiaries and shall
not incur or be liable for any Indebtedness other than guarantees otherwise
permitted under the indenture. Holdings U.K. shall only conduct the business of
holding equity interests and Indebtedness of Restricted Subsidiaries and shall
not incur or be liable for any Indebtedness other than Indebtedness owing to
Huntsman ICI Chemicals or Huntsman ICI Financial. Funds directly or indirectly
advanced to any Foreign Subsidiary by Huntsman ICI Chemicals or any Domestic
Subsidiary may only be so advanced if such funds are (1) advanced directly by
Huntsman ICI Chemicals or a Domestic Subsidiary, (2) contributed to Huntsman
ICI Financial as common equity and Huntsman ICI Financial loans such funds,
directly or indirectly through wholly owned Restricted Subsidiaries, to such
Foreign Subsidiary or (3) contributed to Tioxide Group as common equity and
Tioxide Group invests such funds in such Foreign Subsidiary.

Reports to Holders. Whether or not required by the SEC, so long as any
notes are outstanding, after the date that this exchange offer is required to
be consummated, Huntsman ICI Chemicals will furnish to the holders of notes,
within the time periods specified in the SEC's rules and regulations:

(1) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if
Huntsman ICI Chemicals were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information
only, a report on the annual financial statements by Huntsman ICI
Chemicals' certified independent accountants; and

(2) all current reports that would be required to be filed with the SEC on
Form 8-K if Huntsman ICI Chemicals were required to file such reports.

If Huntsman ICI Chemicals has designated any of its subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by the preceding paragraph shall include a reasonably detailed
presentation, either on the face of the financial statements or in the
footnotes or schedules thereto, and in Management's Discussion and Analysis of
Financial Condition and Results of Operations, of the financial condition and
results of operations of Huntsman ICI Chemicals and its Restricted Subsidiaries
separate from the financial condition and results of operations of the
Unrestricted Subsidiaries of Huntsman ICI Chemicals.

In addition, whether or not required by the SEC, Huntsman ICI Chemicals
will file a copy of all of the information and reports referred to in clauses
(1) and (2) above with the SEC for public availability within the time periods
specified in the SEC's rules and regulations (unless the SEC will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request.

Events of Default

The following events are defined in the indenture as "Events of Default":

(1) the failure to pay interest on any notes when the same becomes due and
payable and the default continues for a period of 30 days (whether or
not such payment shall be prohibited by the subordination provisions
of the indenture);

(2) the failure to pay the principal on any notes, when such principal
becomes due and payable, at maturity, upon redemption or otherwise
(including the failure to make a payment to purchase notes tendered
pursuant to a Change of Control Offer or a Net Proceeds Offer)
(whether or not such payment shall be prohibited by the subordination
provisions of the indenture);

119

(3) a default in the observance or performance of any other covenant or
agreement contained in the indenture which default continues for a
period of 60 days after Huntsman ICI Chemicals receives written notice
specifying the default (and demanding that such default be remedied)
from the trustee or the holders of at least 25% of the outstanding
principal amount of the notes (except in the case of a default with
respect to the "Merger, Consolidation and Sale of Assets" covenant,
which will constitute an Event of Default with such notice requirement
but without such passage of time requirement);

(4) the failure to pay at final maturity (giving effect to any applicable
grace periods and any extensions thereof) the principal amount of any
Indebtedness of Huntsman ICI Chemicals or any Restricted Subsidiary of
Huntsman ICI Chemicals, or the acceleration of the final stated
maturity of any such Indebtedness if the aggregate principal amount of
such Indebtedness, together with the principal amount of any other
such Indebtedness in default for failure to pay principal at final
maturity or which has been accelerated, aggregates $25 million or more
at any time and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of
such final maturity or acceleration;

(5) one or more judgments in an aggregate amount in excess of $25 million
(which are not covered by indemnities or third party insurance as to
which the Person giving such indemnity or such insurer has not
disclaimed coverage) shall have been rendered against Huntsman ICI
Chemicals or any of its Restricted Subsidiaries and such judgments
remain undischarged, unpaid or unstayed for a period of 60 days after
such judgment or judgments become final and non-appealable;

(6) certain events of bankruptcy affecting Huntsman ICI Chemicals or any
of its Significant Subsidiaries; or

(7) any guarantee of a Significant Subsidiary ceases to be in full force
and effect or any such guarantee is declared to be null and void and
unenforceable or any of such guarantee is found to be invalid or any
of the Guarantors denies its liability under its guarantee (other than
by reason of release of a Guarantor in accordance with the terms of
the indenture).

If an Event of Default (other than an Event of Default specified in clause
(vi) above with respect to Huntsman ICI Chemicals) shall occur and be
continuing, the trustee or the holders of at least 25% in principal amount of
outstanding notes may declare the principal of and accrued interest on all the
notes to be due and payable by notice in writing to Huntsman ICI Chemicals and
the trustee specifying the respective Event of Default and that it is a "notice
of acceleration" (the "Acceleration Notice"), and the same (1) shall become
immediately due and payable or (2) if there are any amounts outstanding under
the Designated Senior Debt, shall become immediately due and payable upon the
first to occur of an acceleration under the Designated Senior Debt or five
business days after receipt by Huntsman ICI Chemicals and the Representative
under the Designated Senior Debt of such Acceleration Notice. If an Event of
Default specified in clause (6) above with respect to Huntsman ICI Chemicals
occurs and is continuing, then all unpaid principal of, and premium, if any,
and accrued and unpaid interest on all of the outstanding notes shall ipso
facto become and be immediately due and payable without any declaration or
other act on the part of the trustee or any holder.

The indenture provides that, at any time after a declaration of
acceleration with respect to the notes as described in the preceding paragraph,
the holders of a majority in principal amount of the notes may rescind and
cancel such declaration and its consequences (1) if the rescission would not
conflict with any judgment or decree, (2) if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration, (3) to the extent the payment of
such interest is lawful, interest on overdue installments of interest

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and overdue principal, which has become due otherwise than by such declaration
of acceleration, has been paid, (4) if Huntsman ICI Chemicals has paid the
trustee its reasonable compensation and reimbursed the trustee for its
expenses, disbursements and advances and (5) in the event of the cure or waiver
of an Event of Default of the type described in clause (6) of the description
above of Events of Default, the trustee shall have received an officers'
certificate and an opinion of counsel that such Event of Default has been cured
or waived. No such rescission shall affect any subsequent Default or impair any
right consequent thereto.

The holders of a majority in principal amount of the notes may waive any
existing Default or Event of Default under the indenture, and its consequences,
except a default in the payment of the principal of or interest on any notes.

Holders of the notes may not enforce the indenture or the notes except as
provided in the indenture and under the Trust Indenture Act. Subject to the
provisions of the indenture relating to the duties of the trustee, the trustee
is under no obligation to exercise any of its rights or powers under the
indenture at the request, order or direction of any of the holders, unless such
holders have offered to the trustee reasonable indemnity. Subject to all
provisions of the indenture and applicable law, the holders of a majority in
aggregate principal amount of the then outstanding notes have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power conferred on the
trustee. The trustee may withhold from holders of the notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal, premium or interest) if it determines
that withholding notice is in their interest.

Under the indenture, Huntsman ICI Chemicals is required to provide an
officers' certificate to the trustee promptly upon any such officer obtaining
knowledge of any Default or Event of Default (provided that such officers shall
provide such certification at least annually whether or not they know of any
Default or Event of Default) that has occurred and, if applicable, describe
such Default or Event of Default and the status thereof.

Legal Defeasance and Covenant Defeasance

Huntsman ICI Chemicals may, at its option and at any time, elect to have
its obligations and the obligations of the Guarantors discharged with respect
to the outstanding notes ("Legal Defeasance"). Such Legal Defeasance means that
Huntsman ICI Chemicals shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding notes, except for (1) the rights of
holders to receive, solely from the trust fund described below, payments in
respect of the principal of, premium, if any, and interest on the notes when
such payments are due, (2) Huntsman ICI Chemicals' obligations with respect to
the notes concerning issuing temporary notes, registration of notes, mutilated,
destroyed, lost or stolen notes and the maintenance of an office or agency for
payments, (3) the rights, powers, trust, duties and immunities of the trustee
and Huntsman ICI Chemicals' obligations in connection therewith and (4) the
Legal Defeasance provisions of the indenture. In addition, Huntsman ICI
Chemicals may, at its option and at any time, elect to have the obligations of
Huntsman ICI Chemicals released with respect to certain covenants that are
described in the indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
reorganization and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the notes.

In order to exercise either Legal Defeasance or Covenant Defeasance:

(1) Huntsman ICI Chemicals must irrevocably deposit with the trustee, in
trust, for the benefit of the holders cash in U.S. dollars or non-
callable U.S. government obligations (in the case

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of notes denominated in dollars), euros or non-callable government
obligations of any member nation of the European Union whose official
currency is the euro, rated AAA or better by S&P and Aaa or better by
Moody's (in the case of notes denominated in euros), or a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay
the principal of, premium, if any, and interest on the notes on the
stated date for payment thereof or on the applicable redemption date,
as the case may be;

(2) in the case of Legal Defeasance, Huntsman ICI Chemicals shall have
delivered to the trustee an opinion of counsel in the United States
reasonably acceptable to the trustee confirming that (A) Huntsman ICI
Chemicals has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since June 30, 1999, there
has been a change in the applicable federal income tax law, in either
case to the effect that, and based thereon such opinion of counsel
shall confirm that, the holders will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred; provided, however,
such opinion of counsel shall not be required if all the notes will
become due and payable on the maturity date within one year or are to
be called for redemption within one year under arrangements
satisfactory to the trustee);

(3) in the case of Covenant Defeasance, Huntsman ICI Chemicals shall have
delivered to the trustee an opinion of counsel in the United States
reasonably acceptable to the trustee confirming that the holders will
not recognize income, gain or loss for federal income tax purposes as
a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;

(4) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit;

(5) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under the indenture or
any other material agreement or instrument to which Huntsman ICI
Chemicals or any of its subsidiaries is a party or by which Huntsman
ICI Chemicals or any of its subsidiaries is bound;

(6) Huntsman ICI Chemicals shall have delivered to the trustee an
officers' certificate stating that the deposit was not made by
Huntsman ICI Chemicals with the intent of preferring the holders over
any other creditors of Huntsman ICI Chemicals or with the intent of
defeating, hindering, delaying or defrauding any other creditors of
Huntsman ICI Chemicals or others;

(7) Huntsman ICI Chemicals shall have delivered to the trustee an
officers' certificate and an opinion of counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with; and

(8) Huntsman ICI Chemicals shall have delivered to the trustee an opinion
of counsel to the effect that (A) either (x) Huntsman ICI Chemicals
has assigned all its ownership interest in the trust funds to the
trustee or (y) the trustee has a valid perfected security interest in
the trust funds and (B) assuming no intervening bankruptcy of Huntsman
ICI Chemicals between the date of the deposit and the 124th day
following the perfection of a security interest in the deposit and
that no holder is an insider of Huntsman ICI Chemicals, after the
124th day following the perfection of a security interest in the
deposit, the trust funds will not be subject to avoidance as a
preference under Section 547 of the Federal Bankruptcy Code.

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Satisfaction and Discharge

The indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
notes, as expressly provided for in the indenture) as to all outstanding notes
when (1) either (A) all the notes theretofore authenticated and delivered
(except lost, stolen or destroyed notes which have been replaced or paid and
notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by Huntsman ICI Chemicals and thereafter repaid to
Huntsman ICI Chemicals or discharged from such trust) have been delivered to
the trustee for cancellation or (B) all notes not theretofore delivered to the
trustee for cancellation have become due and payable and Huntsman ICI Chemicals
has irrevocably deposited or caused to be deposited with the trustee funds in
an amount sufficient to pay and discharge the entire Indebtedness on the notes
not theretofore delivered to the trustee for cancellation, for principal of,
premium, if any, and interest on the notes to the date of deposit together with
irrevocable instructions from Huntsman ICI Chemicals directing the trustee to
apply such funds to the payment thereof at maturity or redemption, as the case
may be; (2) Huntsman ICI Chemicals has paid all other sums payable under the
indenture by Huntsman ICI Chemicals; and (3) Huntsman ICI Chemicals has
delivered to the trustee an officers' certificate and an opinion of counsel
stating that all conditions precedent under the indenture relating to the
satisfaction and discharge of the indenture have been complied with. All funds
that remain unclaimed for one year will be paid to Huntsman ICI Chemicals, and
thereafter holders of notes must look to Huntsman ICI Chemicals for payment as
general creditors.

Cancellation

All notes which are redeemed by or on behalf of Huntsman ICI Chemicals will
be cancelled and, accordingly, may not be reissued or resold. If Huntsman ICI
Chemicals purchases any notes, such acquisition shall not operate as a
redemption unless such notes are surrendered for cancellation.

Withholding Taxes

Under certain circumstances, a holder of notes may be subject to
withholding taxes and Huntsman ICI Chemicals will not be required to pay any
additional amounts to cover such withholding taxes. See "Certain U.S. Federal
Tax Consequences--Certification Requirements".

Modification of the Indenture

From time to time, Huntsman ICI Chemicals, the Guarantors and the trustee,
without the consent of the holders, may amend the indenture for certain
specified purposes, including curing ambiguities, defects or inconsistencies,
so long as such change does not, in the opinion of the trustee, adversely
affect the rights of any of the holders in any material respect. In formulating
its opinion on such matters, the trustee will be entitled to rely on such
evidence as it deems appropriate, including, without limitation, solely on an
opinion of counsel. Other modifications and amendments of the indenture may be
made with the consent of the holders of a majority in principal amount of the
then outstanding notes issued under the indenture, except that, without the
consent of each holder affected thereby, no amendment may:

(1) reduce the amount of notes whose holders must consent to an amendment;

(2) reduce the rate of or change or have the effect of changing the time
for payment of interest, including defaulted interest, on any notes;

(3) reduce the principal of or change or have the effect of changing the
fixed maturity of any notes, or change the date on which any notes may
be subject to redemption or repurchase, or reduce the redemption or
repurchase price therefor;

123

(4) make any notes payable in money other than that stated in the notes;

(5) make any change in provisions of the indenture protecting the right of
each holder to receive payment of principal of and interest on such
note on or after the due date thereof or to bring suit to enforce such
payment, or permitting holders of a majority in principal amount of
notes to waive Defaults or Events of Default;

(6) amend, change or modify in any material respect the obligation of
Huntsman ICI Chemicals to make and consummate a Change of Control
Offer in the event of a Change of Control or make and consummate a Net
Proceeds Offer with respect to any Asset Sale that has been
consummated or modify in any material respect any of the provisions or
definitions with respect thereto;

(7) modify or change any provision of the indenture or the related
definitions affecting the subordination or ranking of the notes or any
guarantee in a manner which adversely affects the holders; or

(8) release any Guarantor from any of its obligations under its guarantee
or the indenture otherwise than in accordance with the terms of the
indenture.

Governing Law

The indenture will provide that it, the notes and the guarantees will be
governed by, and construed in accordance with, the laws of the State of New
York but without giving effect to applicable principles of conflicts of law to
the extent that the application of the law of another jurisdiction would be
required thereby.

The Trustee

The indenture will provide that, except during the continuance of an Event
of Default, the trustee will perform only such duties as are specifically set
forth in the indenture. During the existence of an Event of Default, the
trustee will exercise such rights and powers vested in it by the indenture, and
use the same degree of care and skill in its exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.

The indenture and the provisions of the Trust Indenture Act contain certain
limitations on the rights of the trustee, should it become a creditor of
Huntsman ICI Chemicals, to obtain payments of claims in certain cases or to
realize on certain property received in respect of any such claim as security
or otherwise. Subject to the Trust Indenture Act, the trustee will be permitted
to engage in other transactions; provided that if the trustee acquires any
conflicting interest as described in the Trust Indenture Act, it must eliminate
such conflict or resign.

Notices

All notices shall be deemed to have been given (1) the mailing by first
class mail, postage prepaid, of such notices to holders of the notes at their
registered addresses as recorded in the Register; and (2) so long as the notes
are listed on the Luxembourg Stock Exchange and it is required by the rules of
the Luxembourg Stock Exchange, publication of such notice to the holders of the
notes in English in a leading newspaper having general circulation in
Luxembourg (which is expected to be the Luxemburger Wort) or, if such
publication is not practicable, in one other leading English language daily
newspaper with general circulation in Europe, such newspaper being published on
each business day in morning editions, whether or not it shall be published on
Saturday, Sunday or holiday editions.

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Certain Definitions

Set forth below is a summary of certain of the defined terms used in the
indenture. Reference is made to the indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.

"Acquired Indebtedness" means Indebtedness of a Person or any of its
subsidiaries existing at the time such Person becomes a Restricted Subsidiary
of Huntsman ICI Chemicals or at the time it merges or consolidates with
Huntsman ICI Chemicals or any of its Restricted Subsidiaries or assumed in
connection with the acquisition of assets from such Person and in each case not
incurred by such Person in connection with, or in anticipation or contemplation
of, such Person becoming a Restricted Subsidiary of Huntsman ICI Chemicals or
such acquisition, merger or consolidation, except for Indebtedness of a Person
or any of its subsidiaries that is repaid at the time such Person becomes a
Restricted Subsidiary of Huntsman ICI Chemicals or at the time it merges or
consolidates with Huntsman ICI Chemicals or any of its Restricted Subsidiaries.

"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of the
foregoing; provided however that none of the Initial Purchasers or their
Affiliates shall be deemed to be an Affiliate of Huntsman ICI Chemicals.

"Asset Acquisition" means:

. an Investment by Huntsman ICI Chemicals or any Restricted Subsidiary of
Huntsman ICI Chemicals in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of Huntsman ICI Chemicals
or of any Restricted Subsidiary of Huntsman ICI Chemicals, or shall be
merged with or into Huntsman ICI Chemicals or of any Restricted
Subsidiary of Huntsman ICI Chemicals, or

. the acquisition by Huntsman ICI Chemicals or any Restricted Subsidiary
of Huntsman ICI Chemicals of the assets of any Person (other than a
Restricted Subsidiary of Huntsman ICI Chemicals) which constitute all
or substantially all of the assets of such Person or comprises any
division or line of business of such Person or any other properties or
assets of such Person other than in the ordinary course of business.

"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary
course of business), assignment or other transfer for value by Huntsman ICI
Chemicals or any of its Restricted Subsidiaries (including any Sale and
Leaseback Transaction) to any Person other than Huntsman ICI Chemicals or a
Restricted Subsidiary of Huntsman ICI Chemicals of (A) any Capital Stock of any
Restricted Subsidiary of Huntsman ICI Chemicals; or (B) any other property or
assets of Huntsman ICI Chemicals or any Restricted Subsidiary of Huntsman ICI
Chemicals other than in the ordinary course of business; provided, however,
that Asset Sales shall not include (1) a transaction or series of related
transactions for which Huntsman ICI Chemicals or its Restricted Subsidiaries
receive aggregate consideration of less than $5 million, (2) sales of accounts
receivable and related assets (including contract rights) of the type specified
in the definition of "Qualified Securitization Transaction" to a Securitization
Entity for the fair market value thereof, (3) sales or grants of licenses to
use the patents, trade secrets, know-how and other intellectual property of
Huntsman ICI Chemicals or any of its Restricted Subsidiaries to the extent that
such license does not prohibit Huntsman ICI Chemicals or any of its Restricted
Subsidiaries from using the technologies licensed or require Huntsman ICI
Chemicals or any of its Restricted Subsidiaries to pay any fees for any such
use, (4) the sale, lease,

125

conveyance, disposition or other transfer of all or substantially all of the
assets of Huntsman ICI Chemicals as permitted under "Merger, Consolidation and
Sale of Assets", of any Capital Stock or other ownership interest in or assets
or property of an Unrestricted Subsidiary or a Person which is not a
subsidiary, pursuant to any foreclosure of assets or other remedy provided by
applicable law to a creditor of Huntsman ICI Chemicals or any subsidiary of
Huntsman ICI Chemicals with a Lien on such assets, which Lien is permitted
under the indenture; provided that such foreclosure or other remedy is
conducted in a commercially reasonable manner or in accordance with any
bankruptcy law, involving only Cash Equivalents, Foreign Cash Equivalents or
inventory in the ordinary course of business or obsolete equipment in the
ordinary course of business consistent with past practices of Huntsman ICI
Chemicals or including only the lease or sublease of any real or personal
property in the ordinary course of business, (5) the consummation of any
transaction in accordance with the terms of "--Limitation on Restricted
Payments", and (6) Permitted Investments.

"Capital Stock" means:

. with respect to any Person that is a corporation, any and all shares,
interests, participations or other equivalents (however designated and
whether or not voting) of corporate stock, including each class of
Common Stock and Preferred Stock of such Person and

. with respect to any Person that is not a corporation, any and all
partnership, membership or other equity interests of such Person.

"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.

"Cash Equivalents" means:

(1) a marketable obligation, maturing within two years after issuance
thereof, issued or guaranteed by the United States of America or an
instrumentality or agency thereof,

(2) a certificate of deposit or banker's acceptance, maturing within one
year after issuance thereof, issued by any lender under the Credit
Facilities, or a national or state bank or trust company or a
European, Canadian or Japanese bank, in each case having capital,
surplus and undivided profits of at least $100,000,000 and whose long-
term unsecured debt has a rating of "A" or better by S&P or A2 or
better by Moody's or the equivalent rating by any other nationally
recognized rating agency (provided that the aggregate face amount of
all Investments in certificates of deposit or bankers' acceptances
issued by the principal offices of or branches of such European or
Japanese banks located outside the United States shall not at any time
exceed 33 1/3% of all Investments described in this definition),

(3) open market commercial paper, maturing within 270 days after issuance
thereof, which has a rating of A1 or better by S&P or P1 or better by
Moody's, or the equivalent rating by any other nationally recognized
rating agency,

(4) repurchase agreements and reverse repurchase agreements with a term
not in excess of one year with any financial institution which has
been elected primary government securities dealers by the Federal
Reserve Board or whose securities are rated AA- or better by S&P or
Aa3 or better by Moody's or the equivalent rating by any other
nationally recognized rating agency relating to marketable direct
obligations issued or unconditionally guaranteed by the United States
of America or any agency or instrumentality thereof and backed by the
full faith and credit of the United States of America,

(5) "Money Market" preferred stock maturing within six months after
issuance thereof or municipal bonds issued by a corporation organized
under the laws of any state of the

126

United States, which has a rating of "A" or better by S&P or Moody's or
the equivalent rating by any other nationally recognized rating agency,

(6) tax exempt floating rate option tender bonds backed by letters of
credit issued by a national or state bank whose long-term unsecured
debt has a rating of AA or better by S&P or Aa2 or better by Moody's
or the equivalent rating by any other nationally recognized rating
agency, and

(7) shares of any money market mutual fund rated at least AAA or the
equivalent thereof by S&P or at least Aaa or the equivalent thereof by
Moody's or any other mutual fund holding assets consisting (except for
de minimus amounts) of the type specified in clauses (1) through (6)
above.

"Change of Control" means (1) prior to the initial public equity offering
of Huntsman ICI Chemicals, the failure by Mr. Jon M. Huntsman, his spouse,
direct descendants, an entity controlled by any of the foregoing and/or by a
trust of the type described hereafter, and/or a trust for the benefit of any of
the foregoing (the "Huntsman Group"), collectively to have the power, directly
or indirectly, to vote or direct the voting of securities having at least a
majority of the ordinary voting power for the election of directors (or the
equivalent) of Huntsman ICI Chemicals or (2) after the initial public equity
offering, the occurrence of the following: (A) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one
or more members of the Huntsman Group, is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all securities that such
Person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of 35% or more of
the then outstanding voting capital stock of Huntsman ICI Chemicals other than
in a transaction having the approval of the Board of Managers of Huntsman ICI
Chemicals at least a majority of which members are Continuing Managers; or (B)
Continuing Managers shall cease to constitute at least a majority of the
managers constituting the Board of Managers of Huntsman ICI Chemicals.

"Class A Shares" means the Class A Shares of Tioxide Group which have
voting rights but no rights to dividends and a nominal liquidation preference.

"Class B Shares" means the Class B Shares of Holdings U.K. which have
voting rights, a rights to nominal dividends and a nominal liquidation
preference.

"Commodity Agreement" means any commodity futures contract, commodity
option or other similar agreement or arrangement entered into by Huntsman ICI
Chemicals or any of its Restricted Subsidiaries designed to protect Huntsman
ICI Chemicals or any of its Restricted Subsidiaries against fluctuations in the
price of commodities actually at that time used in the ordinary course of
Huntsman ICI Chemicals or its Restricted Subsidiaries.

"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on June 30,
1999 or issued after June 30, 1999, and includes, without limitation, all
series and classes of such common stock.

"Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of (1) Consolidated Net Income, (2) to the extent
Consolidated Net Income has been reduced thereby, (A) all income taxes of such
Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP
for such period (other than income taxes attributable to extraordinary, unusual
or nonrecurring gains or losses or taxes attributable to sales or dispositions
outside the ordinary course of business) and Permitted Tax Distributions paid
during such period, (B) Consolidated Interest Expense and (C) Consolidated Non-
cash Charges less any non-cash items

127

increasing Consolidated Net Income for such period, all as determined on a
consolidated basis for such Person and its Restricted Subsidiaries in
accordance with GAAP.

"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters for which financial statements are available under "--Reports
to Holders" (the "Four Quarter Period") ending on or prior to the date of the
transaction giving rise to the need to calculate the Consolidated Fixed Charge
Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of such
Person for the Four Quarter Period.

In addition to and without limitation of the foregoing, for purposes of
this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall
be calculated after giving effect on a pro forma basis for the period of such
calculation to:

(1) the incurrence or repayment of any Indebtedness of such Person or any
of its Restricted Subsidiaries (and the application of the proceeds
thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of
the proceeds thereof), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital
purposes pursuant to working capital facilities, occurring during the
Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and prior to June 30, 1999, as if such incurrence
or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and

(2) any Asset Sales or Asset Acquisitions (including, without limitation,
any Asset Acquisition giving rise to the need to make such calculation
as a result of such Person or one of its Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result
of the Asset Acquisition) incurring, assuming or otherwise being
liable for Acquired Indebtedness and also including any Consolidated
EBITDA (provided that such Consolidated EBITDA shall be included only
to the extent includible pursuant to the definition of "Consolidated
Net Income") attributable to the assets which are the subject of the
Asset Acquisition or Asset Sale during the Four Quarter Period)
occurring during the Four Quarter Period or at any time subsequent to
the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such
Acquired Indebtedness) occurred on the first day of the Four Quarter
Period.

If such Person or any of its Restricted Subsidiaries directly or indirectly
guarantees Indebtedness of a Person other than Huntsman ICI Chemicals or a
Restricted Subsidiary, the preceding sentence shall give effect to the
incurrence of such guaranteed Indebtedness as if such Person or any Restricted
Subsidiary of such Person had directly incurred or otherwise assumed such
guaranteed Indebtedness. Furthermore, in calculating "Consolidated Fixed
Charges" for purposes of determining the denominator (but not the numerator) of
this "Consolidated Fixed Charge Coverage Ratio," (1) interest on outstanding
Indebtedness determined on a fluctuating basis as of the Transaction Date and
which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate,
a eurocurrency interbank offered rate, or other rates, then the interest rate
in effect on the Transaction Date will be deemed to have been in effect during
the Four Quarter Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.

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"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (1) Consolidated Interest Expense,
plus (2) the product of (A) the amount of all dividend payments on any series
of Preferred Stock of such Person and its Restricted Subsidiaries (other than
dividends paid in Qualified Capital Stock and other than dividends paid to such
Person or to a Restricted Subsidiary of such Person) paid, accrued or scheduled
to be paid or accrued during such period times (B) a fraction, the numerator of
which is one and the denominator of which is one minus the then current
effective consolidated federal, state and local tax rate of such Person,
expressed as a decimal.

"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication: (1) the aggregate of the interest
expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (A) any amortization of debt discount and amortization or write-off
of deferred financing costs, (B) the net costs under Interest Swap Obligations,
(C) all capitalized interest and (D) the interest portion of any deferred
payment obligation; and (2) the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by such Person
and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.

"Consolidated Net Income" means, with respect to any Person, for any
period, the sum of (1) aggregate net income (or loss) of such Person and its
Restricted Subsidiaries for such period on a consolidated basis, determined in
accordance with GAAP plus (2) cash dividends or distributions paid to such
Person by any other Person (the "Payor") other than a Restricted Subsidiary of
the referent Person, to the extent not otherwise included in Consolidated Net
Income, which have been derived from operating cash flow of the Payor; provided
that there shall be excluded therefrom (A) after-tax gains from Asset Sales or
abandonments or reserves relating thereto, (B) after-tax items classified as
extraordinary or nonrecurring gains, (C) the net income of any Person acquired
in a "pooling of interests" transaction accrued prior to the date it becomes a
Restricted Subsidiary of the referent Person or is merged or consolidated with
the referent Person or any Restricted Subsidiary of the referent Person, (D)
the net income (but not loss) of any Restricted Subsidiary of the referent
Person to the extent that the declaration of dividends or similar distributions
by that Restricted Subsidiary of that income is restricted; provided, however,
that the net income of Foreign Subsidiaries shall only be excluded in any
calculation of Consolidated Net Income of Huntsman ICI Chemicals as a result of
application of this clause (D) if the restriction on dividends or similar
distributions results from consensual restrictions, (E) the net income or loss
of any Person, other than a Restricted Subsidiary of the referent Person,
except to the extent of cash dividends or distributions paid to the referent
Person or to a wholly owned Restricted Subsidiary of the referent Person by
such Person, (F) any restoration to income of any contingency reserve, except
to the extent that provision for such reserve was made out of Consolidated Net
Income accrued at any time following June 30, 1999, (G) income or loss
attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued), (H) in the case of a successor to the referent
Person by consolidation or merger or as a transferee of the referent Person's
assets, any earnings of the successor corporation prior to such consolidation,
merger or transfer of assets, (I) all gains or losses from the cumulative
effect of any change in accounting principles and (J) the net amount of all
Permitted Tax Distributions made during such period.

"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity (or equivalent) of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.

"Consolidated Non-cash Charges" means, with respect to any Person, for any
period, the aggregate depreciation, amortization and other non-cash charges of
such Person and its Restricted

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Subsidiaries reducing Consolidated Net Income of such Person and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP (excluding any such charges constituting an extraordinary item or
loss or any such charge which requires an accrual of or a reserve for cash
charges for any future period).

"Continuing Managers" means, as of any date, the collective reference to:

. all members of the Board of Managers of Huntsman ICI Chemicals who have
held office continuously since a date no later than twelve months prior
to Huntsman ICI Chemicals's initial public equity offering, and

. all members of the Board of Managers of Huntsman ICI Chemicals who
assumed office after such date and whose appointment or nomination for
election by Huntsman ICI Chemicals's shareholders was approved by a
vote of at least 50% of the Continuing Managers in office immediately
prior to such appointment or nomination or by the Huntsman Group.

"Contribution Agreement" means the Contribution Agreement, dated April 15,
1999, among Huntsman Specialty, ICI and Huntsman ICI Holdings, as such
agreement is in effect on June 30, 1999.

"Credit Facilities" means the senior secured Credit Agreement, dated as of
April 15, 1999 among Huntsman ICI Chemicals and the financial institutions
party thereto, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented, extended or otherwise modified from time to time, and
any one or more debt facility, indenture or other agreement refinancing,
replacing (whether or not contemporaneously) or otherwise restructuring
(including increasing the amount of available borrowings thereunder (provided
that such increase in borrowings is permitted by the "Limitation on Incurrence
of Additional Indebtedness" covenant above) or making Restricted Subsidiaries
of Huntsman ICI Chemicals a borrower, additional borrower or guarantor
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether including any additional
obligors or with the same or any other agent, lender or group of lenders or
with other financial institutions or lenders.

"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect
Huntsman ICI Chemicals or any Restricted Subsidiary of Huntsman ICI Chemicals
against fluctuations in currency values.

"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of
Default.

"Designated Senior Debt" means:

. Indebtedness under or in respect of the Credit Facilities and

. any other Indebtedness constituting Senior Debt which, at the time of
determination, has an aggregate principal amount of at least
$100,000,000 and is specifically designated in the instrument
evidencing such Senior Debt as "Designated Senior Debt" by Huntsman ICI
Chemicals.

"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or
is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the sole option of the holder thereof on or prior to the
final maturity date of the notes.

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"Domestic Subsidiary" means any subsidiary other than a Foreign Subsidiary.

"Environmental Lien" means a Lien in favor of any governmental authority
arising in connection with any environmental laws.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.

"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Managers of Huntsman ICI Chemicals
acting reasonably and in good faith and shall be evidenced by a board
resolution of the Board of Managers of Huntsman ICI Chemicals delivered to the
trustee.

"Foreign Cash Equivalents" means:

. debt securities with a maturity of 365 days or less issued by any
member nation of the European Union, Switzerland or any other country
whose debt securities are rated by S&P and Moody's A-1 or P-1, or the
equivalent thereof (if a short-term debt rating is provided by either)
or at least AA or AA2, or the equivalent thereof (if a long-term
unsecured debt rating is provided by either) (each such jurisdiction,
an "Approved Jurisdiction") or any agency or instrumentality of an
Approved Jurisdiction, provided that the full faith and credit of the
Approved Jurisdiction is pledged in support of such debt securities or
such debt securities constitute a general obligation of the Approved
Jurisdiction and

. debt securities in an aggregate principal amount not to exceed $25
million with a maturity of 365 days or less issued by any nation in
which Huntsman ICI Chemicals or its Restricted Subsidiaries has cash
which is the subject of restrictions on export or any agency or
instrumentality of such nation, provided that the full faith and credit
of such nation is pledged in support of such debt securities or such
debt securities constitute a general obligation of such nation.

"Foreign Subsidiary" means any subsidiary of Huntsman ICI Chemicals (other
than a Guarantor) organized under the laws of, and conducting a substantial
portion of its business in, any jurisdiction other than the United States of
America or any state thereof or the District of Columbia.

"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which were in effect as of June 30, 1999.

"Guarantor" means:

. each of Tioxide Group, Huntsman ICI Financial and Tioxide Americas Inc.
and

. each of Huntsman ICI Chemicals's Restricted Subsidiaries that in the
future executes a supplemental indenture in which such Restricted
Subsidiary agrees to be bound by the terms of the indenture as a
Guarantor;

provided that any Person constituting a Guarantor as described above shall
cease to constitute a Guarantor when its respective guarantee is released in
accordance with the terms of the indenture.

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"Guarantor Senior Debt" means with respect to any Guarantor, the principal
of, premium, if any, and interest (including any interest accruing subsequent
to the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed
claim under applicable law) on any Indebtedness of a Guarantor, whether
outstanding on June 30, 1999 or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
guarantee of such Guarantor. Without limiting the generality of the foregoing,
"Guarantor Senior Debt" shall also include the principal of, premium, if any,
interest (including any interest accruing subsequent to the filing of a
petition of bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed claim under
applicable law) on, and all other amounts owing in respect of, (w) all
monetary obligations of every nature of a Guarantor in respect of the Credit
Facilities, including, without limitation, obligations to pay principal and
interest, reimbursement obligations under letters of credit, fees, expenses
and indemnities, (x) all monetary obligations of every nature of a Guarantor
evidenced by a promissory note and which is, directly or indirectly, pledged
as security for the obligations of Huntsman ICI Chemicals under the Credit
Facilities, (y) all Interest Swap Obligations and (z) all obligations under
Currency Agreements, in each case whether outstanding on June 30, 1999 or
thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior Debt"
shall not include (1) any Indebtedness of such Guarantor to a Restricted
Subsidiary of such Guarantor or any Affiliate of such Guarantor or any of such
Affiliate's subsidiaries other than as described in clause (x), (2)
Indebtedness to, or guaranteed on behalf of, any shareholder, director,
officer or employee of such Guarantor or any Restricted Subsidiary of such
Guarantor (including, without limitation, amounts owed for compensation), (3)
Indebtedness to trade creditors and other amounts incurred in connection with
obtaining goods, materials or services, (4) Indebtedness represented by
Disqualified Capital Stock, (5) any liability for federal, state, local or
other taxes owed or owing by such Guarantor, (6) Indebtedness incurred in
violation of the indenture provisions set forth under "Limitation on
Incurrence of Additional Indebtedness," (7) Indebtedness which, when incurred
and without respect to any election under Section 1111(b) of Title 11, United
States Code, is without recourse to Huntsman ICI Chemicals and (8) any
Indebtedness which is, by its express terms, subordinated in right of payment
to any other Indebtedness of such Guarantor.

"Holdings U.K." means, Huntsman ICI Holdings (UK), a private unlimited
company incorporated under the laws of England and Wales.

"Huntsman Affiliate" means Huntsman Corporation or any of its Affiliates
(other than Huntsman ICI Holdings and its subsidiaries).

"Huntsman Corporation" means Huntsman Corporation, a Utah corporation.

"Huntsman ICI Holdings Zero Coupon Notes" means, collectively, the Senior
Discount Notes due 2009 and the Subordinated Discount Notes due 2009 issued by
Huntsman ICI Holdings, and any notes into which any such Huntsman ICI Holdings
Zero Coupon Notes may be exchanged or replaced pursuant to the terms of the
indenture pursuant to which such Huntsman ICI Holdings Zero Coupon Notes are
issued.

"Huntsman Specialty" means Huntsman Specialty Chemicals Corporation, a
Utah corporation.

"ICI Affiliate" means ICI or any Affiliate of ICI.

"Indebtedness" means with respect to any Person, without duplication,

(1) all Obligations of such Person for borrowed money,

(2) all Obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments,

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(3) all Capitalized Lease Obligations of such Person,

(4) all Obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations and all
Obligations under any title retention agreement (but excluding trade
accounts payable and other accrued liabilities arising in the ordinary
course of business that are not overdue by 90 days or more or are
being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted),

(5) all Obligations for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction,

(6) guarantees in respect of Indebtedness referred to in clauses (1)
through (5) above and clause (8) below,

(7) all Obligations of any other Person of the type referred to in clauses
(1) through (6) which are secured by any lien on any property or asset
of such Person, the amount of such Obligation being deemed to be the
lesser of the fair market value of such property or asset or the
amount of the Obligation so secured,

(8) all Obligations under Currency Agreements and Interest Swap Agreements
of such Person and

(9) all Disqualified Capital Stock issued by such Person with the amount
of Indebtedness represented by such Disqualified Capital Stock being
equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding
accrued dividends, if any.

For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in
good faith by the board of directors of the issuer of such Disqualified Capital
Stock; provided, however, that notwithstanding the foregoing, "Indebtedness"
shall not include:

(A) advances paid by customers in the ordinary course of business for
services or products to be provided or delivered in the future,

(B) deferred taxes or

(C) unsecured indebtedness of Huntsman ICI Chemicals and/or its Restricted
Subsidiaries incurred to finance insurance premiums in a principal
amount not in excess of the insurance premiums to be paid by Huntsman
ICI Chemicals and/or its Restricted Subsidiaries for a three year
period beginning on the date of any incurrence of such indebtedness.

"Independent Financial Advisor" means a firm:

. which does not, and whose directors, officers and employees or
Affiliates do not, have a direct or indirect financial interest in
Huntsman ICI Chemicals and

. which, in the judgment of the Board of Managers of Huntsman ICI
Chemicals, is otherwise independent and qualified to perform the task
for which it is to be engaged.

"Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive

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from time to time periodic payments calculated by applying either a floating or
a fixed rate of interest on a stated notional amount in exchange for payments
made by such other Person calculated by applying a fixed or a floating rate of
interest on the same notional amount and shall include, without limitation,
interest rate swaps, caps, floors, collars and similar agreements.

"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any Person. "Investment" shall exclude extensions of trade credit by
Huntsman ICI Chemicals and its Restricted Subsidiaries on commercially
reasonable terms in accordance with normal trade practices of Huntsman ICI
Chemicals or such Restricted Subsidiary, as the case may be. For the purposes
of the "Limitation on Restricted Payments" covenant, (1) "Investment" shall
include and be valued at the fair market value of the net assets of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary and shall exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (2) the amount of any
Investment shall be the original cost of such Investment plus the cost of all
additional Investments by Huntsman ICI Chemicals or any of its Restricted
Subsidiaries, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment, reduced
by the payment of dividends or distributions in connection with such Investment
or any other amounts received in respect of such Investment; provided that no
such payment of dividends or distributions or receipt of any such other amounts
shall reduce the amount of any Investment if such payment of dividends or
distributions or receipt of any such amounts would be included in Consolidated
Net Income. If Huntsman ICI Chemicals or any Restricted Subsidiary of Huntsman
ICI Chemicals sells or otherwise disposes of any Common Stock of any direct or
indirect Restricted Subsidiary of Huntsman ICI Chemicals such that, after
giving effect to any such sale or disposition, Huntsman ICI Chemicals no longer
owns, directly or indirectly, greater than 50% of the outstanding Common Stock
of such Restricted Subsidiary, Huntsman ICI Chemicals shall be deemed to have
made an Investment on the date of any such sale or disposition equal to the
fair market value of the Common Stock of such Restricted Subsidiary not sold or
disposed of.

"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof and any agreement to
give any security interest), but not including any interests in accounts
receivable and related assets conveyed by Huntsman ICI Chemicals or any of its
subsidiaries in connection with any Qualified Securitization Transaction.

"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents
(other than the portion of any such deferred payment constituting interest)
received by Huntsman ICI Chemicals or any of its Restricted Subsidiaries from
such Asset Sale net of (A) all out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions), (B) taxes paid or payable after taking
into account any reduction in consolidated tax liability due to available tax
credits or deductions and any tax sharing arrangements, (C) repayment of
Indebtedness that is required to be repaid in connection with such Asset Sale,
(D) the decrease in proceeds from Qualified Securitization Transactions which
results from such Asset Sale and (E) appropriate amounts to be provided by
Huntsman ICI Chemicals or any Restricted Subsidiary, as the case may be, as a
reserve, in accordance with GAAP, against any liabilities associated with such
Asset Sale and retained by Huntsman ICI Chemicals or any Restricted Subsidiary,
as the case may be, after

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such Asset Sale, including, without limitation, pension and other post-
employment benefit liabilities, liabilities related to environmental matters
and liabilities under any indemnification obligations associated with such
Asset Sale.

"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.

"Organizational Documents" means, with respect to any Person, such Person's
memorandum, articles or certificate of incorporation, bylaws, partnership
agreement, joint venture agreement, limited liability company agreement or
other similar governing documents and any document setting forth the
designation, amount and/or relative rights, limitations and preferences of any
class or series of such Person's Capital Stock.

"Permitted Indebtedness" means, without duplication, each of the following:

(1) Indebtedness under the notes, the indenture and the guarantees;

(2) Indebtedness incurred pursuant to the Credit Facilities in an
aggregate principal amount not exceeding $2.4 billion at any one time
outstanding less the amount of any payments made by Huntsman ICI
Chemicals under the Credit Facilities with the Net Cash Proceeds of
any Asset Sale (which are accompanied by a corresponding permanent
commitment reduction) pursuant to clause (3)(A) of the first sentence
of "--Limitation on Asset Sales";

(3) other Indebtedness of Huntsman ICI Chemicals and its Restricted
Subsidiaries outstanding on June 30, 1999 reduced by the amount of any
prepayments with Net Cash Proceeds of any Asset Sale (which are
accompanied by a corresponding permanent commitment reduction)
pursuant to "--Limitation on Asset Sales";

(4) Interest Swap Obligations of Huntsman ICI Chemicals relating to
Indebtedness of Huntsman ICI Chemicals or any of its Restricted
Subsidiaries (or Indebtedness which Huntsman ICI Chemicals or any of
its Restricted Subsidiaries reasonably intends to incur within six
months) and Interest Swap Obligations of any Restricted Subsidiary of
Huntsman ICI Chemicals relating to Indebtedness of such Restricted
Subsidiary (or Indebtedness which such Restricted Subsidiary
reasonably intends to incur within six months); provided, however,
that such Interest Swap Obligations are entered into to protect
Huntsman ICI Chemicals and its Restricted Subsidiaries from
fluctuations in interest rates on Indebtedness permitted under with
the indenture to the extent the notional principal amount of such
Interest Swap Obligation, when incurred, does not exceed the principal
amount of the Indebtedness to which such Interest Swap Obligation
relates;

(5) Indebtedness under Commodity Agreements and Currency Agreements;
provided that in the case of Currency Agreements which relate to
Indebtedness, such Currency Agreements do not increase the
Indebtedness of Huntsman ICI Chemicals and its Restricted Subsidiaries
outstanding other than as a result of fluctuations in foreign currency
exchange rates or by reason of fees, indemnities and compensation
payable thereunder;

(6) Indebtedness of a Restricted Subsidiary of Huntsman ICI Chemicals to
Huntsman ICI Chemicals or to a Restricted Subsidiary of Huntsman ICI
Chemicals for so long as such Indebtedness is held by Huntsman ICI
Chemicals or a Restricted Subsidiary of Huntsman ICI Chemicals, in
each case subject to no Lien held by a Person other than Huntsman ICI
Chemicals or a Restricted Subsidiary of Huntsman ICI Chemicals (other
than the pledge of intercompany notes under the Credit Facilities);
provided that if as of any date any Person other than Huntsman ICI
Chemicals or a Restricted Subsidiary of Huntsman ICI Chemicals owns or
holds any such Indebtedness or holds a Lien in respect of such
Indebtedness

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(other than the pledge of intercompany notes under the Credit
Facilities), such date shall be deemed the incurrence of Indebtedness
not constituting Permitted Indebtedness by the issuer of such
Indebtedness;

(7) Indebtedness of Huntsman ICI Chemicals to a Restricted Subsidiary for
so long as such Indebtedness is held by a Restricted Subsidiary, in
each case subject to no Lien (other than Liens securing intercompany
notes pledged under the Credit Facilities); provided that (A) any
Indebtedness of Huntsman ICI Chemicals to any Restricted Subsidiary
(other than pursuant to notes pledged under the Credit Facilities) is
unsecured and subordinated, pursuant to a written agreement, to
Huntsman ICI Chemicals' obligations under the indenture and the notes
and (B) if as of any date any Person other than a Restricted
Subsidiary owns or holds any such Indebtedness or any Person holds a
Lien in respect of such Indebtedness (other than pledges securing the
Credit Facilities), such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by Huntsman ICI
Chemicals;

(8) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within two business days of incurrence;

(9) Indebtedness of Huntsman ICI Chemicals or any of its Restricted
Subsidiaries represented by letters of credit for the account of
Huntsman ICI Chemicals or such Restricted Subsidiary, as the case may
be, in order to provide security for workers' compensation claims,
payment obligations in connection with self-insurance or similar
requirements in the ordinary course of business;

(10) Refinancing Indebtedness;

(11) Indebtedness arising from agreements of Huntsman ICI Chemicals or a
subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred in connection
with the disposition of any business, assets or subsidiary, other
than guarantees of Indebtedness incurred by any Person acquiring all
or any portion of such business, assets or subsidiary for the purpose
of financing such acquisition; provided that the maximum aggregate
liability in respect of all such Indebtedness shall at no time exceed
the gross proceeds actually received by Huntsman ICI Chemicals and
the subsidiary in connection with such disposition;

(12) Obligations in respect of performance bonds and completion,
guarantee, surety and similar bonds provided by Huntsman ICI
Chemicals or any subsidiary in the ordinary course of business;

(13) Guarantees by Huntsman ICI Chemicals or a Restricted Subsidiary of
Indebtedness incurred by Huntsman ICI Chemicals or a Restricted
Subsidiary so long as the incurrence of such Indebtedness by Huntsman
ICI Chemicals or any such Restricted Subsidiary is otherwise
permitted by the terms of the indenture;

(14) Indebtedness of Huntsman ICI Chemicals or any subsidiary incurred in
the ordinary course of business not to exceed $35 million at any time
outstanding (A) representing Capitalized Lease Obligations or (B)
constituting purchase money Indebtedness incurred to finance property
or assets of Huntsman ICI Chemicals or any Restricted Subsidiary of
Huntsman ICI Chemicals acquired in the ordinary course of business;
provided, however, that such purchase money Indebtedness shall not
exceed the cost of such property or assets and shall not be secured
by any property or assets of Huntsman ICI Chemicals or any Restricted
Subsidiary of Huntsman ICI Chemicals other than the property and
assets so acquired;

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(15) Indebtedness of Foreign Subsidiaries that are Restricted Subsidiaries
to the extent that the aggregate outstanding amount of Indebtedness
incurred by such Foreign Subsidiaries under this clause (15)does not
exceed at any one time an amount equal to the sum of (A) 80% of the
consolidated book value of the accounts receivable of all Foreign
Subsidiaries and (B) 60% of the consolidated book value of the
inventory of all Foreign Subsidiaries; provided, however, that
notwithstanding the foregoing limitation, Foreign Subsidiaries may
incur in the aggregate up to $50 million of Indebtedness outstanding
at any one time;

(16) Indebtedness of Huntsman ICI Chemicals and its Domestic Subsidiaries
pursuant to overdraft lines or similar extensions of credit in an
aggregate amount not to exceed $20 million at any one time
outstanding and Indebtedness of Foreign Subsidiaries pursuant to
over-draft lines or similar extensions of credit in an aggregate
principal amount not to exceed $60 million at any one time
outstanding;

(17) the incurrence by a Securitization Entity of Indebtedness in a
Qualified Securitization Transaction that is not recourse to Huntsman
ICI Chemicals or any subsidiary of Huntsman ICI Chemicals (except for
Standard Securitization Undertakings);

(18) So long as no Event of Default or Potential Event of Default exists,
Indebtedness of Huntsman ICI Chemicals to BASF or its Affiliates in
an aggregate outstanding amount not in excess of $50 million for the
purpose of financing up to 50% of the cost of installation,
construction or improvement of property relating to the manufacture
of PO/MTBE;

(19) Indebtedness of Huntsman ICI Chemicals to a Huntsman Affiliate or an
ICI Affiliate constituting Subordinated Indebtedness;

(20) Indebtedness consisting of take-or-pay obligations contained in
supply agreements entered into in the ordinary course of business;

(21) Indebtedness of Huntsman ICI Chemicals to any to any of its
subsidiaries incurred in connection with the purchase of accounts
receivable and related assets by Huntsman ICI Chemicals from any such
subsidiary which assets are subsequently conveyed by Huntsman ICI
Chemicals to a Securitization Entity in a Qualified Securitization
Transaction; and

(22) additional Indebtedness of Huntsman ICI Chemicals and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $25
million at any one time outstanding.

"Permitted Investments" means:

(1) Investments by Huntsman ICI Chemicals or any Restricted Subsidiary of
Huntsman ICI Chemicals in any Person that is or will become
immediately after such Investment a Restricted Subsidiary of Huntsman
ICI Chemicals or that will merge or consolidate into Huntsman ICI
Chemicals or a Restricted Subsidiary of Huntsman ICI Chemicals;
provided that this clause (1) shall not permit any Investment by
Huntsman ICI Chemicals or a Domestic Restricted Subsidiary in a
Foreign Subsidiary consisting of a capital contribution by means of a
transfer of property other than cash, Cash Equivalents or Foreign Cash
Equivalents other than transfers of property of nominal value in the
ordinary course of business;

(2) Investments in Huntsman ICI Chemicals by any Restricted Subsidiary of
Huntsman ICI Chemicals; provided that any Indebtedness evidencing such
Investment is unsecured and subordinated (other than pursuant to
intercompany notes pledged under the Credit Facilities), pursuant to a
written agreement, to Huntsman ICI Chemicals' obligations under the
notes and the indenture;

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(3) investments in cash and Cash Equivalents;

(4) loans and advances to employees and officers of Huntsman ICI Chemicals
and its Restricted Subsidiaries in the ordinary course of business for
travel, relocation and related expenses;

(5) Investments in Unrestricted Subsidiaries or joint ventures not to
exceed $75 million, plus (A) the aggregate net after-tax amount
returned in cash on or with respect to any Investments made in
Unrestricted Subsidiaries and joint ventures whether through interest
payments, principal payments, dividends or other distributions or
payments, (B) the net after-tax cash proceeds received by Huntsman ICI
Chemicals or any Restricted Subsidiary from the disposition of all or
any portion of such Investments (other than to a Restricted Subsidiary
of Huntsman ICI Chemicals), (C) upon redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary, the fair market value of such
subsidiary and (D) the net cash proceeds received by Huntsman ICI
Chemicals from the issuance of Specified Venture Capital Stock;

(6) Investments in securities received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or
insolvency of any debtors of Huntsman ICI Chemicals or its Restricted
Subsidiaries;

(7) Investments made by Huntsman ICI Chemicals or its Restricted
Subsidiaries as a result of consideration received in connection with
an Asset Sale made in compliance with the "Limitation on Asset Sales"
covenant;

(8) Investments existing on June 30, 1999;

(9) any Investment by Huntsman ICI Chemicals or a wholly owned subsidiary
of Huntsman ICI Chemicals, or by Tioxide Group or Holdings U.K., in a
Securitization Entity or any Investment by a Securitization Entity in
any other Person in connection with a Qualified Securitization
Transaction; provided that any Investment in a Securitization Entity
is in the form of a Purchase Money Note or an equity interest;

(10) Investments by Huntsman ICI Chemicals in Rubicon, Inc. and Louisiana
Pigment Company (each a "Joint Venture"), so long as: (A) such Joint
Venture does not have any Indebtedness for borrowed money at any time
on or after the date of such Investment (other than Indebtedness
owing to the equity holders of such Joint Venture), (B) the
documentation governing such Joint Venture does not contain a
restriction on distributions to Huntsman ICI Chemicals, and (C) such
Joint Venture is engaged only in the business of manufacturing
product used or marketed by Huntsman ICI Chemicals and its Restricted
Subsidiaries and/or the joint venture partner, and businesses
reasonably related thereto;

(11) Investments by Foreign Subsidiaries in Foreign Cash Equivalents;

(12) loans to Huntsman ICI Holdings for the purposes described in clause
(7) of the second paragraph of "Certain Covenants--Limitation on
Restricted Payments") which, when aggregated with the payment made
under such clause, will not exceed $3 million in any fiscal year;

(13) any Indebtedness of Huntsman ICI Chemicals to any of its subsidiaries
incurred in connection with the purchase of accounts receivable and
related assets by Huntsman ICI Chemicals from any such subsidiary
which assets are subsequently conveyed by Huntsman ICI Chemicals to a
Securitization Entity in a Qualified Securitization Transaction; and

(14) additional Investments in an aggregate amount not exceeding $25
million at any one time outstanding.

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"Permitted Junior Securities" means: (1) Capital Stock in Huntsman ICI
Chemicals or any Guarantor; or (2) debt securities of Huntsman ICI Chemicals or
any Guarantor that (A) are subordinated to all Senior Debt and any debt
securities issued in exchange for Senior Debt to substantially the same extent
as, or to a greater extent than, the notes and the related guarantees are
subordinated to Senior Debt pursuant to the terms of the indenture and (B) have
a Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of the notes.

"Permitted Tax Distribution" for any fiscal year means any payments made in
compliance with clause (6) of the second paragraph under "Certain Covenants--
Limitation on Restricted Payments."

"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.

"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.

"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.

"Qualified Securitization Transaction" means any transaction or series of
transactions that may be entered into by Huntsman ICI Chemicals or any of its
subsidiaries pursuant to which Huntsman ICI Chemicals or any of its
subsidiaries may sell, convey or otherwise transfer pursuant to customary terms
to (1) a Securitization Entity or to Huntsman ICI Chemicals which subsequently
transfers to a Securitization Entity (in the case of a transfer by Huntsman ICI
Chemicals or any of its subsidiaries) and (2) any other Person (in the case of
transfer by a Securitization Entity), or may grant a security interest in any
accounts receivable (whether now existing or arising or acquired in the future)
of Huntsman ICI Chemicals or any of its subsidiaries, and any assets related
thereto including, without limitation, all collateral securing such accounts
receivable, all contracts and contract rights and all guarantees or other
obligations in respect of such accounts receivable, proceeds of such accounts
receivable and other assets (including contract rights) which are customarily
transferred or in respect of which security interests are customarily granted
in connection with asset securitization transactions involving accounts
receivable.

"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.

"Refinancing Indebtedness" means any Refinancing by Huntsman ICI Chemicals
or any Restricted Subsidiary of Huntsman ICI Chemicals of Indebtedness incurred
in accordance with the "Limitation on Incurrence of Additional Indebtedness"
covenant or Indebtedness described in clause (3) of the definition of
"Permitted Indebtedness", in each case that does not (1) result in an increase
in the aggregate principal amount of Indebtedness of such Person as of the date
of such proposed Refinancing (plus the amount of any premium required to be
paid under the terms of the instrument governing such Indebtedness and plus the
amount of reasonable expenses incurred by Huntsman ICI Chemicals in connection
with such Refinancing) or (2) create Indebtedness with (A) a Weighted Average
Life to Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced or (B) a final maturity earlier than the final
maturity of the Indebtedness being Refinanced; provided that (x) if such
Indebtedness being Refinanced is Indebtedness of Huntsman ICI Chemicals, then
such Refinancing Indebtedness shall be Indebtedness solely of Huntsman ICI
Chemicals and (y) if such Indebtedness being Refinanced is subordinate or
junior to the notes, then

139

such Refinancing Indebtedness shall be subordinate to the notes at least to the
same extent and in the same manner as the Indebtedness being Refinanced.

"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Debt; provided that if, and
for so long as, any Designated Senior Debt lacks such a representative, then
the Representative for such Designated Senior Debt shall at all times
constitute the holders of a majority in outstanding principal amount of such
Designated Senior Debt in respect of any Designated Senior Debt.

"Restricted Subsidiary" of any Person means any subsidiary of such Person
which at the time of determination is not an Unrestricted Subsidiary.

"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to Huntsman ICI Chemicals or a Restricted Subsidiary of any property,
whether owned by Huntsman ICI Chemicals or any Restricted Subsidiary on June
30, 1999 or later acquired, which has been or is to be sold or transferred by
Huntsman ICI Chemicals or such Restricted Subsidiary to such Person or to any
other Person from whom funds have been or are to be advanced by such Person on
the security of such Property.

"Securitization Entity" means a wholly owned subsidiary of Huntsman ICI
Chemicals (or Tioxide Group, Holdings U.K. another Person in which Huntsman ICI
Chemicals or any subsidiary of Huntsman ICI Chemicals makes an Investment and
to which Huntsman ICI Chemicals or any subsidiary of Huntsman ICI Chemicals
transfers accounts receivable or equipment and related assets) which engages in
no activities other than in connection with the financing of accounts
receivable or equipment and which is designated by the Board of Managers of
Huntsman ICI Chemicals (as provided below) as a Securitization Entity

(1) no portion of the Indebtedness or any other Obligations (contingent or
otherwise) of which

. is guaranteed by Huntsman ICI Chemicals or any subsidiary of
Huntsman ICI Chemicals (other than the Securitization Entity)
(excluding guarantees of Obligations (other than the principal of,
and interest on, Indebtedness)) pursuant to Standard Securitization
Undertakings,

. is recourse to or obligates Huntsman ICI Chemicals or any
subsidiary of Huntsman ICI Chemicals (other than the Securitization
Entity) in any way other than pursuant to Standard Securitization
Undertakings or

. subjects any property or asset of Huntsman ICI Chemicals or any
subsidiary of Huntsman ICI Chemicals (other than the Securitization
Entity), directly or indirectly, contingently or otherwise, to the
satisfaction thereof, other than pursuant to Standard
Securitization Undertakings and other than any interest in the
accounts receivable or equipment and related assets being financed
(whether in the form of an equity interest in such assets or
subordinated indebtedness payable primarily from such financed
assets) retained or acquired by Huntsman ICI Chemicals or any
subsidiary of Huntsman ICI Chemicals,

(2) with which neither Huntsman ICI Chemicals nor any subsidiary of
Huntsman ICI Chemicals has any material contract, agreement,
arrangement or understanding other than on terms no less favorable to
Huntsman ICI Chemicals or such subsidiary than those that might be
obtained at the time from Persons that are not Affiliates of Huntsman
ICI Chemicals, other than fees payable in the ordinary course of
business in connection with servicing receivables of such entity, and

(3) to which neither Huntsman ICI Chemicals nor any subsidiary of Huntsman
ICI Chemicals has any obligation to maintain or preserve such entity's
financial condition or cause such

140

entity to achieve certain levels of operating results. Any such
designation by the Board of Managers of Huntsman ICI Chemicals shall be
evidenced to the trustee by filing with the trustee a certified copy of
the resolution of the Board of Managers of Huntsman ICI Chemicals
giving effect to such designation and an officers' certificate
certifying that such designation complied with the foregoing
conditions.

"Senior Debt" means the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on any
Indebtedness of Huntsman ICI Chemicals, whether outstanding on June 30, 1999
or thereafter created, incurred or assumed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the notes. Without
limiting the generality of the foregoing, "Senior Debt" shall also include the
principal of, premium, if any, interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for
in the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on, and all other amounts owing in respect
of, (1) all monetary obligations of every nature of Huntsman ICI Chemicals
under the Credit Facilities, including, without limitation, obligations to pay
principal and interest, reimbursement obligations under letters of credit,
fees, expenses and indemnities, (2) all Interest Swap Obligations and (3) all
Obligations under Currency Agreements and Commodity Agreements, in each case
whether outstanding on June 30, 1999 or thereafter incurred. Notwithstanding
the foregoing, "Senior Debt" shall not include (1) any Indebtedness of
Huntsman ICI Chemicals to a Restricted Subsidiary of Huntsman ICI Chemicals or
any Affiliate of Huntsman ICI Chemicals or any of such Affiliate's
subsidiaries, (2) Indebtedness to, or guaranteed on behalf of, any
shareholder, director, officer or employee of Huntsman ICI Chemicals or any
subsidiary of Huntsman ICI Chemicals (including, without limitation, amounts
owed for compensation), (3) Indebtedness to trade creditors and other amounts
incurred in connection with obtaining goods, materials or services, (4)
Indebtedness represented by Disqualified Capital Stock, (5) any liability for
federal, state, local or other taxes owed or owing by Huntsman ICI Chemicals,
(6) Indebtedness incurred in violation of the indenture provisions set forth
under "Limitation on Incurrence of Additional Indebtedness," (7) Indebtedness
which, when incurred and without respect to any election under Section 1111(b)
of Title 11, United States Code, is without recourse to Huntsman ICI Chemicals
and (8) any Indebtedness which is, by its express terms, subordinated in right
of payment to any other Indebtedness of Huntsman ICI Chemicals.

"Significant Subsidiary" means any Restricted Subsidiary of Huntsman ICI
Chemicals which, at the date of determination, is a "Significant Subsidiary"
as such term is defined in Regulation S-X under the Exchange Act.

"Specified Venture Capital Stock" means Qualified Capital Stock of
Huntsman ICI Chemicals or holdings issued to a Person who is not an Affiliate
of Huntsman ICI Chemicals and the proceeds from the issuance of which are
applied within 180 days after the issuance thereof to an Investment in an
Unrestricted Subsidiary or joint venture.

"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by Huntsman ICI Chemicals or any
subsidiary of Huntsman ICI Chemicals which are reasonably customary in an
accounts receivable securitization transaction.

"Subordinated Indebtedness" means Indebtedness of Huntsman ICI Chemicals
or any Guarantor which is expressly subordinated in right of payment to the
notes or the guarantee of such Guarantor, as the case may be.

141

"Tax Sharing Agreement" means the provisions contained in the Limited
Liability Company Agreements of Huntsman ICI Chemicals and Huntsman ICI
Holdings as in existence on June 30, 1999 relating to distributions to be made
to the members thereof with respect to such members' income tax liabilities.

"UK Holdco Note" means that certain unsecured promissory note issued by
Holdings U.K. in favor of Huntsman ICI Financial.

"Unrestricted Subsidiary" of any Person means (1) any subsidiary of such
Person that at the time of determination shall be or continue to be designated
an Unrestricted Subsidiary in the manner provided below, and (2) any subsidiary
of an Unrestricted Subsidiary. The Board of Managers of Huntsman ICI Chemicals
may designate any subsidiary (including any newly acquired or newly formed
subsidiary) to be an Unrestricted Subsidiary unless such subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, Huntsman ICI
Chemicals or any other subsidiary of Huntsman ICI Chemicals that is not a
subsidiary of the subsidiary to be so designated; provided that (A) Huntsman
ICI Chemicals certifies to the trustee that such designation complies with the
"Limitation on Restricted Payments" covenant and (B) each subsidiary to be so
designated and each of its Subsidiaries has not at the time of designation, and
does not thereafter, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable with respect to any Indebtedness pursuant
to which the lender has recourse to any of the assets of Huntsman ICI Chemicals
or any of its Restricted subsidiaries. The Board of Managers of Huntsman ICI
Chemicals may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if (A) immediately after giving effect to such designation,
Huntsman ICI Chemicals is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness" covenant and (B)
immediately before and immediately after giving effect to such designation, no
Default or Event of Default shall have occurred and be continuing. Any such
designation by the Board of Managers of Huntsman ICI Chemicals shall be
evidenced to the trustee by promptly filing with the trustee a copy of the
board resolution giving effect to such designation and an officers' certificate
certifying that such designation complied with the foregoing provisions.

"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (A) the then outstanding
aggregate principal amount of such Indebtedness into (B) the sum of the total
of the products obtained by multiplying (1) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (2) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.

Listing

The outstanding notes are listed on the Luxembourg Stock Exchange and we
have applied to list the exchange notes on the Luxembourg Stock Exchange. The
legal notice relating to the issue of the exchange notes and our limited
liability company agreement will be registered prior to the listing with the
Registrar of the District Court in Luxembourg, where such documents are
available for inspection and where copies thereof can be obtained upon request.
As long as any notes are listed on the Luxembourg Stock Exchange and as long as
the rules of such exchange so require, an agent for making payments on, and
transfer of, notes will be maintained in Luxembourg. We have initially
designated Banque Generale du Luxembourg as our agent for such purposes.

Form, Denomination, Book-Entry Procedures and Transfer

Except as set forth below, the notes issued in the exchange offer will be
issued in registered, global form in minimum denominations of $1,000 or
(Euro)1,000 and integral multiples of $1,000 or (Euro)1,000.

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The notes which are denominated in dollars to be issued in the exchange
offer will be represented by one or more global notes in definitive, fully
registered form without interest coupons (collectively, the "Dollar Global
Note") and will be deposited with the trustee as custodian for the Depository
Trust Company ("DTC") and registered in the name of a nominee of DTC. The notes
denominated in euros to be issued in the exchange offer will be represented by
one global note in fully registered form without interest coupons (the "Euro
Global Note") and will be deposited with The First National Bank of Chicago,
London Branch as common depositary for Euroclear (the "Common Depositary") and
registered in the name of a nominee of the Common Depositary. All holders of
notes denominated in euros who exchange their outstanding notes denominated in
euros in the exchange offer will hold their interests through the Euro Global
Note, regardless of whether they purchased their interests pursuant to Rule
144A or Regulation S.

Except in the limited circumstances described below, owners of beneficial
interests in global notes will not be entitled to receive physical delivery of
certificated notes. Transfers of beneficial interests in the global notes will
be subject to the applicable rules and procedures of DTC, Euroclear and
Cedelbank and their respective direct or indirect participants which rules and
procedures may change from time to time.

Global Notes. The following description of the operations and procedures of
DTC, Euroclear and Cedelbank are provided solely as a matter of convenience.
These operations and procedures are solely within the control of the respective
settlement systems and are subject to changes by them from time to time.
Huntsman ICI Chemicals takes no responsibility for these operations and
procedures and urges investors to contact the system or their participants
directly to discuss these matters.

Upon the issuance of the Dollar Global Note, DTC will credit, on its
internal system, the respective principal amount of the individual beneficial
interests represented by such global note to the accounts of persons who have
accounts with such depositary. Such accounts initially will be designated by or
on behalf of the exchange agent. Ownership of beneficial interests in a Dollar
Global Note will be limited to its participants or persons who hold interests
through its participants. Ownership of beneficial interests in the Dollar
Global Notes will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC or its nominee (with respect
to interests of participants) and the records of participants (with respect to
interests of persons other than participants).

Upon the issuance of the Euro Global Note, the Common Depositary will
credit, on its internal system, the respective principal amount of the
beneficial interests represented by such global note to the accounts of
Euroclear. Euroclear will credit, on its internal systems, the respective
principal amounts of the individual beneficial interests in such global notes
to the accounts of persons who have accounts with Euroclear. Such accounts
initially will be designated by or on behalf of the Initial Purchasers.
Ownership of beneficial interests in the Euro Global Note will be limited to
participants or persons who hold interests through participants in Euroclear.
Ownership of beneficial interests in Euro Global Note will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
Euroclear or its nominees (with respect to interests of participants) and the
records of participants (with respect to interests of persons other than
participants).

As long as DTC or the Common Depositary, or its respective nominee, is the
registered holder of a global note, DTC or the Common Depositary or such
nominee, as the case may be, will be considered the sole owner and holder of
the notes represented by such global notes for all purposes under the indenture
and the notes. Unless (1) in the case of a Dollar Global Note, DTC notifies
Huntsman ICI Chemicals that it is unwilling or unable to continue as depositary
for a global note or ceases to be a "Clearing Agency" registered under the
Exchange Act,

143

(2) in the case of a Euro Global Note, Euroclear notifies Huntsman ICI
Chemicals it is unwilling or unable to continue as clearing agency, (3) in the
case of a Euro Global Note, the Common Depositary notifies Huntsman ICI
Chemicals that it is unwilling or unable to continue as Common Depositary and a
successor Common Depositary is not appointed within 120 days of such notice or
(4) in the case of any note, an event of default has occurred and is continuing
with respect to such note, described below under "--Form, Denomination, Book-
Entry Procedures and Transfer--Certificated Notes", owners of beneficial
interests in a global note will not be entitled to have any portions of such
global note registered in their names, will not receive or be entitled to
receive physical delivery of notes in certificated form and will not be
considered the owners or holders of the global note (or any notes represented
thereby) under the indenture or the notes. In addition, no beneficial owner of
an interest in a global note will be able to transfer that interest except in
accordance with DTC's and/or Euroclear's and Cedelbank's applicable procedures
(in addition to those under the indenture referred to herein).

Investors may hold their interests in the Dollar Global Note through
Euroclear or Cedelbank and the Euro Global Note through Euroclear, if they are
participants in such systems, or indirectly through organizations which are
participants in such systems. Cedelbank and Euroclear will hold interests in
the Dollar Global Note on behalf of their participants through customers'
securities accounts in their respective names on the books of the Common
Depositary. Investors may hold their interests in the Dollar Global Note
directly through DTC, if they are participants in such system, or indirectly
through organizations (including Euroclear and Cedelbank) which are
participants in such system. All interests in a global note may be subject to
the procedures and requirements of DTC and/or Euroclear and Cedelbank.

Payments of the principal of and interest on Dollar Global Notes will be
made to DTC or its nominee as the registered owner thereof. Payments of the
principal of and interest on the Euro Global Note will be made to the order of
the Common Depositary or its nominee as the registered owner thereof. Neither
Huntsman ICI Chemicals, the trustee, the Common Depositary nor any of their
respective agents will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in the global notes or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

Huntsman ICI Chemicals expects that DTC or its nominee, upon receipt of any
payment of principal or interest in respect of a global note representing any
notes held by it or its nominee, will immediately credit participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of such global note for such notes as shown on the
records of DTC or its nominee. Huntsman ICI Chemicals expects that the Common
Depositary, in its capacity as paying agent, upon receipt of any payment or
principal or interest in respect of a global note representing any notes held
by it or its nominee, will immediately credit the accounts of Euroclear which
in turn will immediately credit accounts of participants in Euroclear with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such global note for such notes as shown on the records
of Euroclear and Cedelbank. Huntsman ICI Chemicals also expects that payments
by participants to owners of beneficial interests in such global note held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers registered in "street name". Such payments will be the
responsibility of such participants.

Because DTC, Euroclear and Cedelbank can only act on behalf of their
respective participants, who in turn act on behalf of indirect participants and
certain banks, the ability of a holder of a beneficial interest in global notes
to pledge such interest to persons or entities that do not participate in the
DTC, Euroclear or Cedelbank systems, or otherwise take actions in respect of
such interest, may be limited by the lack of a definitive certificate for such
interest. The laws of some countries and

144

some U.S. states require that certain persons take physical delivery of
securities in certificated form. Consequently, the ability to transfer
beneficial interests in a global note to such persons may be limited. Because
DTC, Euroclear and Cedelbank can act only on behalf of participants, which, in
turn, act on behalf of indirect participants and certain banks, the ability of
a person having a beneficial interest in a global note to pledge such interest
to persons or entities that do not participate in the DTC system or in
Euroclear and Cedelbank, as the case may be, or otherwise take actions in
respect of such interest, may be affected by the lack of a physical certificate
evidencing such interest.

Except for trades involving only Euroclear and Cedelbank participants,
interests in the Dollar Global Note will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its participants. Transfers of interests in
Dollar Global Notes between participants in DTC will be effected in accordance
with DTC's procedures, and will be settled in same-day funds. Transfers of
interests in Euro Global Notes and Dollar Global Notes between participants in
Euroclear and Cedelbank will be effected in the ordinary way in accordance with
their respective rules and operating procedures.

Subject to compliance with the transfer restrictions applicable to the
notes described above, cross-market transfers of dollar notes between DTC
participants, on the one hand, and Euroclear or Cedelbank participants, on the
other hand, will be effected in DTC in accordance with DTC's rules on behalf of
Euroclear or Cedelbank, as the case may be by its respective depositary;
however, such crossmarket transactions will require delivery of instructions to
Euroclear or Cedelbank, as the case may be, by the counterparty in such system
in accordance with the rules and procedures and within the established
deadlines (Brussels time) of such system. Euroclear or Cedelbank, as the case
may be, will, if the transaction meets its settlement requirements, deliver
instructions to its respective depositary to take action to effect final
settlement on its behalf by delivering or receiving interests in the relevant
global note in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Euroclear
participants and Cedelbank participants may not deliver instructions directly
to the depositories for Euroclear or Cedelbank.

Because of time zone differences, the securities account of a Euroclear or
Cedelbank participant purchasing an interest in the Dollar Global Note from a
DTC participant will be credited, and any such crediting will be reported to
the relevant Euroclear or Cedelbank participant, during the securities
settlement processing day (which must be a business day for Euroclear and
Cedelbank immediately following the DTC settlement date). Cash received in
Euroclear or Cedelbank as a result of sales of interests in a global note by or
through a Euroclear or Cedelbank participant to a DTC participant will be
received with value on the DTC settlement date but will be available in the
relevant Euroclear or Cedelbank cash account only as of the business day for
Euroclear or Cedelbank following the DTC settlement date.

DTC, Euroclear and Cedelbank have advised Huntsman ICI Chemicals that they
will take any action permitted to be taken by a holder of notes (including the
presentation of notes for exchange as described below) only at the direction of
one or more participants to whose account with DTC or Euroclear or Cedelbank,
as the case may be, interests in the global notes are credited and only in
respect of such portion of the aggregate principal amount of the notes as to
which such participant or participants has or have given such direction.
However, if there is an event of default under the notes, DTC, Euroclear and
Cedelbank reserve the right to exchange the global notes for legended notes in
certificated form, and to distribute such notes to their respective
participants.

DTC has advised Huntsman ICI Chemicals as follows: DTC is a limited purpose
trust company organized under the laws of the State of New York, a member of
the Federal Reserve system, a

145

"clearing corporation" within the meaning of the Uniform Commercial Code and a
"Clearing Agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its participants and
facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical transfer and delivery
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system is available to other entities
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly ("indirect participants").

Euroclear and Cedelbank have advised Huntsman ICI Chemicals as follows:
Euroclear and Cedelbank each hold securities for their account holders and
facilitate the clearance and settlement of securities transactions by
electronic book-entry transfer between their respective account holders,
thereby eliminating the need for physical movements of certificates and any
risk from lack of simultaneous transfers of securities.

Euroclear and Cedelbank each provide various services including
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Euroclear and Cedelbank each
also deal with domestic securities markets in several countries through
established depository and custodial relationships. The respective systems of
Euroclear and Cedelbank have established an electronic bridge between their two
systems across which their respective account holders may settle trades with
each other.

Account holders in both Euroclear and Cedelbank are world-wide financial
institutions including underwriters, securities brokers and dealers, trust
companies and clearing corporations. Indirect access of both Euroclear and
Cedelbank is available to other institutions that clear through or maintain a
custodial relationship with an account holder of either system.

An account holder's overall contractual relations with either Euroclear or
Cedelbank are governed by the respective rules and operating procedures of
Euroclear or Cedelbank and any applicable laws. Both Euroclear and Cedelbank
act under such rules and operating procedures only on behalf of their
respective account holders, and have no record of or relationship with persons
holding through their respective account holders.

Although DTC, Euroclear and Cedelbank currently follow the foregoing
procedures to facilitate transfers of interests in global notes among
participants of DTC, Euroclear and Cedelbank, they are under no obligation to
do so, and such procedures may be discontinued or modified at any time. Neither
Huntsman ICI Chemicals nor the trustee will have any responsibility for the
performance by DTC, Euroclear or Cedelbank or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.

Certificated Notes. If any depositary is at any time unwilling or unable to
continue as a depositary for notes for the reasons set forth above under "--
Form, Denomination, Book-Entry Procedures and Transfer--Global Notes", Huntsman
ICI Chemicals will issue certificates for such notes in definitive, fully
registered, non-global form without interest coupons in exchange for the Dollar
Global Note or the Euro Global Note, as the case may be. Certificates for notes
delivered in exchange for any global note or beneficial interests therein will
be registered in the names, and issued in any approved denominations, requested
by DTC, Euroclear, Cedelbank or the Common Depositary (in accordance with their
customary procedures).

The holder of a non-global note may transfer such note by surrendering it
at the office or agency maintained by Huntsman ICI Chemicals for such purpose
in the Borough of Manhattan, The City of New York, which initially will be the
office of the trustee or of the Transfer Agent in

146

Luxembourg. Upon transfer or partial redemption of any note, new certificates
may be obtained from the Transfer Agent in Luxembourg.

Notwithstanding any statement herein, Huntsman ICI Chemicals and the
trustee reserve the right to impose such transfer, certification, exchange or
other requirements, and to require such restrictive legends on certificates
evidencing notes, as they may determine are necessary to ensure compliance with
the securities laws of the United States and the states therein and any other
applicable laws or as DTC, Euroclear or Cedelbank may require.

Same-Day Settlement and Payment

The indenture requires that payments in respect of the notes represented by
the global notes, including principal, premium, if any, interest and liquidated
damages, if any, be made by wire transfer of immediately available funds to the
accounts specified by the global note holder. With respect to notes in
certificated form, Huntsman ICI Chemicals will make all payments of principal,
premium, if any, interest and liquidated damages, if any, by wire transfer of
immediately available funds to the accounts specified by the holders thereof
or, if no such account is specified, by mailing a check to each such holder's
registered address. Certificated notes may be surrendered for payment at the
offices of the trustee or, so long as the notes are listed on the Luxembourg
Stock Exchange, the Paying Agent in Luxembourg on the maturity date of the
notes. The notes represented by the global notes are expected to be eligible to
trade in DTC's, Same-Day Firm Settlement System, and any permitted secondary
market trading activity in such notes will, therefore, be required by DTC to be
settled in immediately available funds. Huntsman ICI Chemicals expects that
secondary trading in any certificated notes will also be settled in immediately
available funds.

Because of time zone differences, the securities account of a Euroclear or
Cedelbank participant purchasing an interest in a global note from a
participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear or Cedelbank participant, during the securities
settlement processing day (which must be a business day for Euroclear and
Cedelbank) immediately following the settlement date of DTC. Cash received in
Euroclear or Cedelbank as a result of sales of interests in a global note by or
through a Euroclear or Cedelbank participant to a participant in DTC will be
received with value on the settlement date of DTC but will be available in the
relevant Euroclear or Cedelbank cash account only as of the business day for
Euroclear or Cedelbank following DTC's settlement date.

Registration Covenant; Exchange Offer

Huntsman ICI Chemicals has entered into an exchange and registration rights
agreement pursuant to which Huntsman ICI Chemicals has agreed, for the benefit
of the holders of the notes:

(1) to use its reasonable best efforts to file with the SEC a registration
statement with respect to the notes to be exchanged for the
outstanding notes, of which this prospectus forms a part; and

(2) to use its reasonable best efforts to cause the registration statement
of which this prospectus forms a part to become effective within 210
days following the Closing.

Huntsman ICI Chemicals has further agreed to commence the exchange offer
promptly after the exchange offer registration statement has become effective,
hold the offer open for at least 30 days, and exchange notes for all notes
validly tendered and not withdrawn before the expiration of the offer.

Under existing SEC interpretations, the exchange notes would in general be
freely transferable after the exchange offer without further registration under
the Securities Act, except that broker-

147

dealers ("Participating Broker-Dealers") receiving exchange notes in the
exchange offer will be subject to a prospectus delivery requirement with
respect to resales of those exchange notes. The SEC has taken the position that
Participating Broker-Dealers may fulfill their prospectus delivery requirements
with respect to the exchange notes (other than a resale of an unsold allotment
from the original sale of the notes) by delivery of the prospectus contained in
the exchange offer registration statement. Under the exchange and registration
rights agreement, Huntsman ICI Chemicals is required to allow Participating
Broker-Dealers and other persons, if any, subject to similar prospectus
delivery requirements to use the prospectus contained in the exchange offer
registration statement in connection with the resale of such exchange notes.
Each holder of notes (other than certain specified holders of notes) who wishes
to exchange such notes for exchange notes in the exchange offer will be
required to represent that any exchange notes to be received by it will be
acquired in the ordinary course of its business, that at the time of the
commencement of the exchange offer it has no arrangement with any person to
participate in the distribution (within the meaning of the Securities Act) of
the exchange notes and that it is not an Affiliate of Huntsman ICI Chemicals.

However, if:

. on or before the date of consummation of the exchange offer, the
existing SEC interpretations are changed such that the exchange notes
would not in general be freely transferable in such manner on such
date; or

. the exchange offer has not been consummated on or before March 12,
2000; or

. the exchange offer is not available by any holder of the notes,

Huntsman ICI Chemicals will, in lieu of (or, in the case of clause (3), in
addition to) effecting registration of exchange notes, use its reasonable best
efforts to cause a registration statement under the Securities Act relating to
a shelf registration of the notes for resale by holders or, in the case of
clause (3), of the notes held by the initial purchasers of the notes for resale
by the initial purchasers (the "Resale Registration") to become effective and
to remain effective until two years following the effective date of such
registration statement or such shorter period that will terminate when all the
securities covered by the shelf registration statement have been sold pursuant
to the shelf registration statement.

Huntsman ICI Chemicals will, in the event of the Resale Registration,
provide to the holder or holders of the applicable notes copies of the
prospectus that is a part of the registration statement filed in connection
with the Resale Registration, notify such holder or holders when the Resale
Registration for the applicable notes has become effective and take certain
other actions as are required to permit unrestricted resales of the applicable
notes. A holder of notes that sells such notes pursuant to the Resale
Registration generally would be required to be named as a selling security
holder in the related prospectus and to deliver a prospectus to purchasers,
will be subject to certain of the civil liability provisions under the
Securities Act in connection with such sales and will be bound by the
provisions of the exchange and registration rights agreement that are
applicable to such holder (including certain indemnification obligations).

Although Huntsman ICI Chemicals intends to file the registration statement
previously described, we cannot assure you that the registration statement will
be filed or, if filed, that it will become effective.

In the event that:

(1) the registration statement relating to the exchange offer (or, if
applicable, the Resale Registration) has not become effective on or
before January 27, 2000; or

(2) the exchange offer has not been consummated within 45 business days
after the effective date of the exchange offer registration statement;
or

148

(3) any registration statement required by the exchange and registration
rights agreement is filed and declared effective but shall thereafter
cease to be effective (except as specifically permitted therein)
without being succeeded immediately by an additional registration
statement filed and declared effective (any such event referred to in
clauses (1) through (4), the "Registration Default"),

then the per annum interest rate on the applicable notes will increase, for the
period from the occurrence of the Registration Default until such time as no
Registration Default is in effect (at which time the interest rate will be
reduced to its initial rate) by 0.25% during the first 90-day period following
the occurrence of such Registration Default, which rate shall increase by an
additional 0.25% during each subsequent 90-day period, up to a maximum of 1.0%.

The summary herein of certain provisions of the exchange and registration
rights agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the exchange
and registration rights agreement, a copy of which will be available upon
request to Huntsman ICI Chemicals.

We have filed an application to list the exchange notes on the Luxembourg
Stock Exchange. Huntsman ICI Chemicals will publish, in accordance with the
procedures described under "Notices," a notice of the commencement of the
exchange offer and any increase in the rate of interest on the notes, as well
as the results of the exchange offer and the new identifying numbers of the
securities (the common codes and ISINs). All documents prepared in connection
with the exchange offer will be available for inspection at the office of the
paying and transfer agent in Luxembourg and all necessary actions and services
in respect of the exchange offer may be done at the office of the paying and
transfer agent in Luxembourg.

The notes and the exchange notes will be considered collectively to be a
single class for all purposes under the indenture, including, without
limitation, waivers, amendments, redemptions and offers to purchase.

149

PLAN OF DISTRIBUTION

Each broker-dealer that receives notes for its own account in the exchange
offer must acknowledge that it will deliver a prospectus in connection with any
resale of those notes. This prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
notes received in the exchange offer where the outstanding notes were acquired
as a result of market-making activities or other trading activities. We have
agreed that, for a period of 180 days after the consummation of the exchange
offer, we will make this prospectus, as amended and supplemented, available to
any broker-dealer for use in connection with any such resale. In addition,
until , 1999, all dealers effecting transactions in the notes issued in
the exchange offer may be required to deliver a prospectus.

Neither Huntsman ICI Chemicals nor any of the Guarantors will receive any
proceeds from any sale of notes by broker-dealers. Notes received by broker-
dealers for their own account in the exchange offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the notes or a combination of
such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or though brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer or the purchasers of any such notes. Any broker-
dealer that resells notes that were received by it for its own account in the
exchange offer and any broker or dealer that participates in a distribution of
such notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and profit on any such resale of notes issued in the exchange
and any commission or concessions received by any such persons may be deemed to
be underwriting compensation under the Securities Act. The letter of
transmittal states that, by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.

For a period of 180 days after the consummation of the exchange offer,
Huntsman ICI Chemicals will promptly send additional copies of this prospectus
and any amendment or supplement to this prospectus to any broker-dealer that
requests such documents in the letter of transmittal. Huntsman ICI Chemicals
has agreed to pay all expenses incident to the exchange offer, including the
expenses of one counsel for the holders of the notes, other than the
commissions or concessions of any broker-dealers and will indemnify the holders
of the notes, including any broker-dealers, against certain liabilities,
including liabilities under the Securities Act. We note, however, that, in the
opinion of the SEC, indemnification against liabilities arising under federal
securities laws is against public policy and may be unenforceable.

150

CERTAIN U.S. FEDERAL TAX CONSEQUENCES

The following is a general summary of material U.S. federal tax
consequences of the exchange of outstanding notes for the notes to be issued in
the exchange offer and of the ownership and disposition of those new notes to
holders who acquired the outstanding notes at the initial offering for the
original offering price and who acquire new notes in the exchange offer. This
discussion is based on U.S. federal income tax laws, regulations, ruling and
decisions, all as in effect on the date hereof, and all of which are subject to
change, possibly with retroactive effect. This discussion does not address all
aspects of U.S. federal taxation that may be relevant to a particular holder of
the notes based on such holder's particular circumstances. For example, the
following discussion does not address the U.S. federal income tax consequences
of the ownership and disposition of the notes to a holder who is a broker-
dealer, an insurance company, a tax-exempt organization, a financial
institution or who is a non-U.S. holder (as defined below) that controls 10% or
more of the capital or profits interest of Huntsman ICI Chemicals, or of any
related person to Huntsman ICI Chemicals. Further, this discussion generally
considers only holders of notes that purchased the notes upon the initial
offering and that own their notes as capital assets (generally, assets held for
investment) and does not consider the tax treatment of holders that hold the
notes through a partnership or other pass-through entity. Prospective investors
are urged to consult their tax advisors regarding the U.S. Federal tax
consequences of acquiring, holding, and disposing of the notes, as well as any
tax consequences that may arise under the laws of any foreign, state, local or
other taxing jurisdiction.

For purposes of this discussion, a U.S. holder is any person who is:

. a citizen or resident of the U.S.;

. a corporation, partnership, or other entity created or organized in the
U.S. or under the laws of the U.S. or of any political subdivision
thereof;

. an estate the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source; or

. a trust whose administration is subject to the primary supervision of a
U.S. court and which has one or more U.S. persons who have the
authority to control all substantial decisions of the trust.

The Exchange Offer

An exchange of the notes for the exchange notes pursuant to the exchange
offer will be ignored for federal income tax purposes, assuming, as expected,
that the terms of the exchange notes are substantially identical to the terms
of the notes. Consequently, a holder of the notes will not recognize taxable
gain or loss as a result of exchanging notes pursuant to the exchange offer.
The holding period of the exchange notes will be the same as the holding period
of the notes and the tax basis in the exchange notes will be the same as the
basis in the notes immediately before the exchange.

Taxation of U.S. Holders of Notes

Interest

Payments of interest on the notes will be includible in a U.S. holder's
taxable income as ordinary interest income at the time such payments are
accrued or received, in accordance with such holder's method of tax accounting.

151

Payments of interest that are made to a U.S. holder in respect of notes
that are denominated in a currency other than the U.S. dollar (e.g., Euros),
will be included in gross income by the U.S. holder based on the U.S. dollar
value of such interest payments. The U.S. dollar value of the interest payments
will be translated by a U.S. holder that uses the cash method of tax accounting
based on the spot rate of exchange on the date of receipt regardless of whether
the payments in fact are converted to U.S. dollars. The U.S. dollar value of
the interest payments will be translated by a U.S. holder that uses the accrual
method of tax accounting based on the average exchange rate in effect during
the accrual period (or a portion thereof within the holder's taxable year), or
at such holder's election at the spot rate of exchange on (1) the last day of
the accrual period (or the last day of the taxable year within such accrual
period if the accrual period spans more than one taxable year); or (2) the date
of receipt, if such date is within five business days of the last day of the
accrual period. Such election must be applied consistently by the U.S. holder
to all debt instruments from year to year and can be changed only with the
consent of the Internal Revenue Service. A U.S. holder that uses the accrual
method of tax accounting will recognize exchange gain or loss if the spot rate
of exchange on the date the interest payments are received differs from the
rate applicable to the accrual of that interest in income.

Upon the disposition of the foreign currency, a U.S. holder will recognize
exchange gain or loss in amount equal to the difference between the amount
realized on such disposition and its basis in the foreign currency. The basis
of the U.S. holder in the foreign currency and the amount realized on the
disposition of the foreign currency will be determined by the spot rate of
exchange on the date of receipt or disposition, respectively. Exchange gain and
loss are treated as ordinary income or loss for U.S. federal income tax
purposes.

Sale, Exchange or Retirement of the Notes

Upon the sale, exchange or retirement of a note, a U.S. holder generally
will recognize capital gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement (less any accrued but unpaid
interest, which will be taxed as such), and its adjusted tax basis in the note.
Such gain or loss will be long term capital gain or loss if the note was held
by the U.S. holder for more than one year on the date of the sale, exchange or
retirement.

If a U.S. holder receives a specified currency other than the U.S. dollar
on the sale, exchange or retirement of a note, the amount realized will be the
U.S. dollar value of the foreign currency received calculated at the spot rate
of exchange on the date of the sale, exchange or retirement. In the case of a
note that is traded on an established securities market, a U.S. holder that
uses the cash method of tax accounting, and a U.S. holder that uses the accrual
method of tax accounting and that makes the election discussed below, will
determine the U.S. dollar value of its basis in the note and the amount
realized on the disposition of the note by translating the foreign currency
paid for the note and the foreign currency received on the disposition of the
note at the spot rate of exchange on the settlement date of such purchase and
disposition, respectively. The election available to accrual basis U.S. holders
in respect of the purchase and sale of notes denominated in foreign currency
traded on an established securities market must be applied consistently by the
U.S. holders to all debt instrument from year to year and can be changed only
with the consent of the Internal Revenue Service.

A U.S. holder will recognize exchange gain or loss upon the disposition of
the foreign currency received on the sale, exchange or retirement of the notes
equal to the difference between the amount realized on the disposition of the
foreign currency and its basis in the foreign currency. Exchange gain and loss
are treated as ordinary income or loss for U.S. federal income tax purposes.

152

Taxation of Non-U.S. Holders of the Notes

Interest

Payments of interest on the notes to any person who is not a U.S. holder,
which will be referred to as a non-U.S. holder, who satisfies the certification
requirements described below under "Certification Requirements", generally will
not be subject to United States Federal income or withholding tax, provided
that (1) the non-U.S. holder does not actually or constructively own 10% or
more of the capital or profits interest of Huntsman ICI Chemicals; (2) the non-
U.S. holder is not a controlled foreign corporation that is related to Huntsman
ICI Chemicals; or (3) such interest payments are not effectively connected with
the conduct of a United States trade or business of the non-U.S. holder.

Disposition of the Notes

A non-U.S. holder of notes generally will not be subject to U.S. federal
income tax on gain realized on the sale, exchange, or other disposition of a
note, unless (1) such holder is an individual who is present in the U.S. for
183 days or more during the taxable year and certain other requirements are
met, or (2) the gain is effectively connected with the conduct of a U.S. trade
or business of the non-U.S. holder.

Certification Requirements

Information reporting and backup withholding tax at the rate of 31% may
apply to the payments of interest on the notes, and on payment of the proceeds
of a sale or other disposition of the notes. A U.S. holder will generally be
exempt from backup withholding tax if the U.S. holder delivers a properly filed
Internal Revenue Service Form W-9 or a substantially similar substitute form
certifying as to its tax identification numbers, or otherwise establishes an
exemption from backup withholding. A non-U.S. holder generally will be exempt
from the backup withholding tax and information reporting requirements if the
holder delivers a properly filed Internal Revenue Service Form W-8 or a
substantially similar substitute form certifying as to its foreign status, or
otherwise establishes an exemption from backup withholding.

In addition, as mentioned above, a non-U.S. holder might be subject to
withholding tax on the payments of interest on the notes. In order to be exempt
from withholding tax, the non-U.S. holder must deliver a properly filed
Internal Revenue Service Form W-8 or a substantially similar substitute form
certifying as to its foreign status.

Estate Tax

If interest on the notes is exempt from withholding of U.S. federal income
tax under the rules described above, the notes will not be included in the
estate of a deceased non-U.S. holder for U.S. federal estate tax purposes.

LEGAL MATTERS

Certain legal matters as to the validity of the notes offered hereby will
be passed upon for Huntsman ICI Chemicals by Skadden, Arps, Slate, Meagher &
Flom LLP, New York, New York.

153

EXPERTS

The financial statements of Huntsman Specialty Chemicals Corporation
included in this prospectus as of December 31, 1997 and 1998 and for the two
months ended February 28, 1997, the ten months ended December 31, 1997 and for
the year end December 31, 1998, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.

The financial statements of Texaco Chemical Inc. included in this
prospectus to the extent and for the period indicated in their report have been
audited by Arthur Andersen LLP, independent public accountants, and are
included herein in reliance upon the authority of such firm as experts in
giving such reports.

The combined financial statements of the polyurethane chemicals, TiO\\2\\
and selected petrochemicals businesses included in this prospectus for the
years ended December 31, 1996, 1997 and 1998 have been audited by KPMG Audit
Plc, independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm as experts in accounting and
auditing.

GENERAL LISTING INFORMATION

Listing

We have applied to list the exchange notes on the Luxembourg Stock
Exchange. Our limited liability company agreement and the legal notice relating
to the issue of the exchange notes will be deposited prior to any listing with
the Registrar of the District Court in Luxembourg (Greffier en Chef du Tribunal
d'Arrondissement a Luxembourg), where such documents are available for
inspection and where copies thereof can be obtained upon request. As long as
the notes are listed on the Luxembourg Stock Exchange, an agent for making
payments on, and transfers of, notes will be maintained in Luxembourg.

The notes denominated in euros have been accepted for clearance by
Euroclear under the common code . The ISIN for the notes denominated in
euros is .

The CUSIP number for the notes denominated in dollars is .

The issuance of the notes was authorized by the Managers of Huntsman ICI
Chemicals by unanimous written consent on June 22, 1999.

Documents

For so long as the notes are listed on the Luxembourg Stock Exchange and
the rules of such exchange so require, copies of the following documents may be
inspected at the specified office of the Paying Agent and Registrar in
Luxembourg:

. Limited Liability Company Agreement of Huntsman ICI Chemicals LLC;

. the indenture relating to the notes, which includes the forms of the
note certificates; and

. the exchange and registration rights agreement.

In addition, copies of the most recent consolidated financial statements of
Huntsman ICI Chemicals for the preceding financial year, and any interim
quarterly financial statements published

154

by Huntsman ICI Chemicals will be available at the specified office of the
Paying Agent in Luxembourg for so long as the notes are listed on the
Luxembourg Stock Exchange and the rules of such exchange so require. The
Guarantors do not and will not publish separate reports.

Responsibility Statement

Having made all reasonable inquiries, we confirm that this prospectus
contains all information with respect to Huntsman ICI Chemicals and the notes
which is material in the context of the issue and offering of the notes, that
such information is true and accurate in every material respect and is not
misleading in any material respect and that this prospectus does not omit to
state any material fact necessary to make such information not misleading. The
opinions, assumptions and intentions expressed in this prospectus with regard
to Huntsman ICI Chemicals are honestly held, have been reached after
considering all relevant circumstances and are based on reasonable assumptions.
We accept responsibility for the information contained in this prospectus
accordingly. We represent that, other than as contemplated by the pro forma
financial information presented in this prospectus, there has been no material
adverse change in our financial position since March 31, 1999.

155

INDEX TO FINANCIAL STATEMENTS

Page
----

Huntsman ICI Chemicals LLC
Independent Auditors' Report--Deloitte & Touche LLP ..................... F-2
Balance Sheet as of June 30, 1999 (Date of Initial Capitalization)....... F-3
Notes to Balance Sheet................................................... F-4
Huntsman Specialty Chemicals Corporation and its Predecessor:
Independent Auditors' Report--Deloitte & Touche LLP...................... F-6
Report of Independent Public Accountants--Arthur Andersen LLP............ F-7
Balance Sheets as of December 31, 1997 and 1998.......................... F-8
Statements of Operations for the year ended December 31, 1996 and
the two months ended February 28, 1997 and the ten months ended
December 31, 1997 and the year ended December 31, 1998.................. F-10
Statements of Stockholders' Equity for the year ended December 31,
1996, the two months ended February 28, 1997, the ten months ended
December 31, 1997 and the year ended December 31, 1998 ................. F-11
Statements of Cash Flows for the year ended December 31, 1996, the two
months ended February 28, 1997, the ten months ended December 31, 1997
and the year ended December 31, 1998.................................... F-12
Notes to Financial Statements............................................ F-13
Balance Sheets as of December 31, 1998 and March 31, 1999 (Unaudited) ... F-26
Statements of Income for the three months ended March 31, 1998
and 1999 (Unaudited) ................................................... F-28
Statements of Cash Flows for the three months ended March 31,
1998 and 1999 (Unaudited) .............................................. F-29
Notes to Financial Statements (Unaudited) ............................... F-30
ICI Businesses:
Independent Auditors Report--KPMG Audit Plc.............................. F-38
Combined Profit and Loss Accounts for the years ended
December 31, 1996, 1997 and 1998........................................ F-39
Combined Statements of Total Recognised Gains and Losses
for the years ended December 31, 1996, 1997 and 1998.................... F-39
Combined Balance Sheets as at December 31, 1997 and 1998................. F-40
Combined Cash Flow Statements for the years ended
December 31, 1996, 1997 and 1998........................................ F-41
Reconciliation of Movements in Combined Net Investment for the years
ended
December 31, 1996, 1997 and 1998........................................ F-41
Notes to the Combined Financial Statements............................... F-42
Unaudited Condensed Combined Profit and Loss Accounts for the three
months ended March 31, 1998 and March 31, 1999.......................... F-71
Unaudited Condensed Combined Balance Sheets as at December 31, 1998 and
March 31, 1999.......................................................... F-72
Unaudited Condensed Combined Cash Flow Statements for the three months
ended March 31, 1998 and 1999........................................... F-73
Notes to the Unaudited Condensed Combined Financial Statements........... F-74

F-1

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Huntsman ICI Chemicals LLC

We have audited the accompanying balance sheet of Huntsman ICI Chemicals
LLC (the "Company") (a wholly-owned subsidiary of Huntsman ICI Holdings LLC) as
of June 30, 1999 (date of initial capitalization). This financial statement is
the responsibility of the Company's management. Our responsibility is to
express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.

In our opinion, such balance sheet presents fairly, in all material
respects, the financial position of the Company at June 30, 1999 in conformity
with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Salt Lake City, Utah
August 12, 1999

F-2

HUNTSMAN ICI CHEMICALS LLC
(a wholly-owned subsidiary of Huntsman ICI Holdings LLC)

BALANCE SHEET
June 30, 1999 (Date of Initial Capitalization)

ASSETS
Cash..................................................................... $1,000
------
TOTAL.................................................................... $1,000
======
MEMBER'S EQUITY
Member's Equity.......................................................... $1,000
------
TOTAL.................................................................... $1,000
======

See notes to balance sheet.

F-3

HUNTSMAN ICI CHEMICALS LLC
(a wholly-owned subsidiary of Huntsman ICI Holdings LLC)

NOTES TO BALANCE SHEET
As of June 30, 1999 (Date of Initial Capitalization)

1. GENERAL

The accompanying balance sheet includes the accounts of Huntsman ICI
Chemicals LLC (the Company), a wholly owned subsidiary of Huntsman ICI
Holdings LLC (Holdings). The Company was incorporated on April 12, 1999
for the purpose of entering into a Contribution Agreement to acquire
certain businesses of Imperial Chemical Industries PLC (ICI) discussed in
Note 2 and the propylene oxide (PO) business of Huntsman Specialty
Chemical Company (HSCC). Holdings and HSCC are majority-owned subsidiaries
of Huntsman Corporation. The Company was initially funded on
June 30, 1999.

Use of Estimates in Preparing Financial Statements--The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

2. SUBSEQUENT EVENTS

Effective July 1, 1999, pursuant to a contribution agreement and ancillary
agreements between the Company, HSCC, ICI, and Holdings, the Company
acquired assets and stock representing ICI's polyurethene chemicals,
selected petrochemicals, (including ICI's 80% interest in the Wilton
Olefins facility), and TiO\\2\\ businesses and HSCC's PO business. In
addition, at the close of business on June 30, 1999, the Company also
acquired the remaining 20% ownership interest in the Wilton Olefins
facility from BP Chemicals, Limited (BP Chemicals), as well as the BP
Chemicals' interest in related infrastructure assets for approximately
$118 million.

In exchange for transferring its business to the Company, HSCC (1)
retained a 60% common equity interest in Holdings and (2) received
approximately $360 million in cash. In exchange for transferring its
business to the Company, ICI received (1) a 30% common equity interest in
Holdings, (2) approximately $2 billion in cash that was paid in a
combination of U.S. dollars and euros, and (3) discount notes of Holdings
with approximately $508 million of accreted value at issuance. The
obligations of the discount notes from Holdings are non-recourse to the
Company. BT Capital Investors, L.P., Chase Equity Associates, L.P., and
the Goldman Sachs Group acquired the remaining 10% common equity interest
in Holdings for approximately $90 million cash.

The cash sources to finance the above transactions are summarized as
follows (in millions):

Senior secured credit facilities...................................... $1,685
Senior subordinated notes............................................. 807
Cash equity from institutional investors.............................. 90
------
Total cash sources.................................................... $2,582
======

F-4

HSCC is considered the acquiror of the businesses transferred to the
Company in connection with the transaction with ICI and HSCC because the
shareholders of HSCC acquired majority control of the businesses
transferred to the Company. The transactions with ICI and BP Chemicals
will be accounted for as purchase transactions, and accordingly, the
financial statements of the Company effective July 1, 1999 will reflect
the purchase price (including transaction costs and liabilities assumed)
based upon the estimated fair values.

3. BORROWING ARRANGEMENTS

The Senior Secured Credit Facilities will allow the Company to borrow up
to an aggregate of $2,070 million comprised of as follows (in millions):

Revolving loan....................................................... $ 400
Term A dollar loan................................................... 240
Term A euro loan (in euro equivalent)................................ 300
Term B loan.......................................................... 565
Term C loan.......................................................... 565
------
Total................................................................ $2,070
======

Both the term A dollar loan facility and the term A euro loan facility
mature on June 30, 2005 and are payable in semi-annual installments
commencing December 31, 2000 with the amortization increasing over time.
The term B loan facility matures on June 30, 2007 and the term C loan
facility matures on June 30, 2008. Both the term B and term C loan
facilities require repayments in annual installments of $5.65 million
each, commencing June 30, 2000, with the remaining unpaid balance due on
final maturity. The revolving loan facility matures on June 30, 2005 with
no scheduled commitment reductions.

Interest rates for the Senior Secured Credit Facilities are based upon, at
the Company's option, either a eurocurrency rate or a base rate plus a
spread. The applicable spreads vary based on a pricing grid, in the case
of eurocurrency based loans, from 1.25% to 3.50% per annum depending on
the loan facility and whether specified conditions have been satisfied
and, in the case of base rate loans, from 0% to 2.25% per annum.

The obligations under the Senior Secured Credit Facilities are supported
by guarantees of certain other subsidiaries (Tioxide Group Limited,
Tioxide America, Inc., and Huntsman ICI Financial LLC) and Holdings as
well as pledges of 65% of the voting stock of certain non-U.S.
subsidiaries. The Senior Secured Credit Facilities contain covenants
relating to incurrence of debt, purchase and sale of assets, limitations
on investments, affiliate transactions and maintenance of certain
financial ratios. The Senior Secured Credit Facilities limit the payment
of dividends generally to the amount required by the members to pay income
taxes.

The Company issued $600 million and (Euro)200 million 10 1/8% Senior
Subordinated Notes (the Notes). Interest on the Notes is payable semi-
annually and the Notes mature on July 1, 2009. The Notes will be
guaranteed by the Company's domestic subsidiaries and certain non-U.S.
subsidiaries. The Notes may be redeemed, in whole or in part, at any time
by the Company on or after July 1, 2004, at percentages ranging from 105%
to 100% at July 1, 2007 of their face amount, plus accrued and unpaid
interest. The Notes contain covenants relating to the incurrence of debt,
limitations on distributions, asset sales and affiliate transactions,
among other things. The Notes also contain a change in control provision
requiring the Company to offer to repurchase the Notes upon a change in
control.

F-5

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholder of
Huntsman Specialty Chemicals Corporation

We have audited the accompanying balance sheets of Huntsman Specialty
Chemicals Corporation (the "Company"), formerly Texaco Chemical, Inc. (the
"Predecessor Company"), as of December 31, 1997 and 1998, and the related
statements of operations, stockholder's equity, and cash flows for the two
months ended February 28, 1997 (Predecessor Company operations), the period
from March 1, 1997 (commencement of operations) to December 31, 1997 and the
year ended December 31, 1998. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Huntsman Specialty Chemicals Corporation at
December 31, 1997 and 1998 and the results of the Predecessor Company
operations and its cash flows for the two months ended February 28, 1997 and
the results of the Company operations and cash flows for the period March 1,
1997 to December 31, 1997 and the year ended December 31, 1998, in conformity
with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Houston, Texas
February 26, 1999 (June 2, 1999 as to Note 14)

F-6

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Texaco Chemical Inc.:

We have audited the accompanying statements of operations, stockholders'
equity and cash flows of Texaco Chemical Inc. (a Delaware corporation) (the
"Predecessor Company") for the year ended December 31, 1996. These financial
statements are the responsibility of Texaco Chemical Inc.'s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of the operations and cash flows of
Texaco Chemical Inc. for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Houston, Texas
February 14, 1997

F-7

HUNTSMAN SPECIALTY CHEMICALS CORPORATION

BALANCE SHEETS
(In thousands)

As of December
31,
------------------
1997 1998
-------- --------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 2)........................ $ 10,093 $ 2,574
Accounts receivable....................................... 43,894 45,787
Related party accounts receivable (Note 8)................ 5,144 4,710
Inventories (Notes 2 and 3)............................... 23,102 19,687
Deferred tax asset (Note 7)............................... 655
Other current assets...................................... 974 862
-------- --------
Total current assets.................................... 83,862 73,620
-------- --------
PLANT AND EQUIPMENT (Notes 1 and 2):
Land and improvements..................................... 3,575 3,575
Buildings and equipment................................... 404,013 415,268
Construction-in-progress.................................. 4,600 3,753
-------- --------
Total plant and equipment............................... 412,188 422,596
Less accumulated depreciation and amortization............ (16,920) (37,505)
-------- --------
Plant and equipment, net................................ 395,268 385,091
-------- --------

OTHER ASSETS (Notes 2 and 4)................................ 114,542 118,922
-------- --------
TOTAL....................................................... $593,672 $577,633
======== ========

See notes to financial statements.

F-8

HUNTSMAN SPECIALTY CHEMICALS CORPORATION

BALANCE SHEETS
(In thousands)

As of December
31,
-----------------
1997 1998
-------- --------

LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable (Note 2).................................. $ 15,207 $ 9,394
Related party accounts payable (Note 8).................... 8,797 16,588
Accrued liabilities (Note 5)............................... 10,236 13,835
Deferred income taxes (Note 7)............................. 3,436
Current portion of long-term debt.......................... 9,209
-------- --------
Total current liabilities................................ 43,449 43,253
-------- --------
LONG-TERM DEBT (Notes 1, 2 and 6)
Senior Credit Facilities................................... 256,100 221,987
Term Loan.................................................. 135,000 135,000
BASF note.................................................. 63,473 70,575
-------- --------
Total long-term debt..................................... 454,573 427,562
-------- --------
DEFERRED INCOME TAXES (Notes 2 and 7)........................ 2,572 4,264
MANDATORILY REDEEMABLE PREFERRED STOCK
($1 par value; 65,000 shares authorized, issued and
outstanding-stated at liquidation value of $1,000 per
share, including $2,682 and $6,909 in unpaid dividends,
respectively)............................................. 67,682 71,909
-------- --------
Total liabilities........................................ 568,276 546,988
-------- --------
COMMITMENTS AND CONTINGENCIES (Notes 8, 9, 11 and 12)
STOCKHOLDER'S EQUITY:
Common stock ($.01 par value; 2,500 shares authorized,
issued and outstanding)...................................
Additional paid-in capital................................. 25,000 25,000
Retained earnings.......................................... 396 5,645
-------- --------
Total stockholder's equity............................... 25,396 30,645
-------- --------
TOTAL........................................................ $593,672 $577,633
======== ========

See notes to financial statements.

F-9

HUNTSMAN SPECIALTY CHEMICALS CORPORATION

STATEMENTS OF OPERATIONS
(In thousands)

Predecessor Company
-------------------------
Two Months Ten Months
Year Ended Ended Ended Year Ended
December 31, February 28, December 31, December 31,
1996 1997 1997 1998
------------ ------------ ------------ ------------

REVENUE:
Sales (Note 13)......... $358,071 $42,800 $283,808 $253,161
Related party sales
(Note 8)............... 46,582 9,657 24,053 32,999
Tolling fees............ 8,552 40,666 52,509
Other revenue........... 10,424 -- -- --
-------- ------- -------- --------
Total revenue......... 415,077 61,009 348,527 338,669
COST OF SALES (Note 8).... 377,173 64,935 300,051 276,538
-------- ------- -------- --------
GROSS PROFIT (LOSS)....... 37,904 (3,926) 48,476 62,131
EXPENSES (Notes 8 and 9):
Sales, general &
administrative......... 15,256 1,103 5,499 4,830
Research and
development............ 3,695 694 2,578 3,030
-------- ------- -------- --------
Total expenses........ 18,951 1,797 8,077 7,860
-------- ------- -------- --------
OPERATING INCOME (LOSS)... 18,953 (5,723) 40,399 54,271
INTEREST EXPENSE (Note
6)....................... 35,985 40,925
INTEREST INCOME........... (581) (1,050)
OTHER INCOME.............. (863)
-------- ------- -------- --------
INCOME (LOSS) BEFORE
INCOME TAXES............. 18,953 (5,723) 4,995 15,259
INCOME TAX EXPENSE
(BENEFIT) (Notes 2 and
7)....................... 6,643 (2,035) 1,917 5,783
-------- ------- -------- --------
NET INCOME (LOSS)......... $ 12,310 $(3,688) $ 3,078 $ 9,476
======== ======= ======== ========

See notes to financial statements.

F-10

HUNTSMAN SPECIALTY CHEMICALS CORPORATION

STATEMENTS OF STOCKHOLDER'S EQUITY
(In thousands)

Additional Retained
Common Paid-In Earnings
Stock Capital (Deficit) Total
------ ---------- --------- -------

Predecessor Company:
BALANCE, JANUARY 1, 1996................ $ 1 $ $(7,338) $(7,337)
Net income.............................. 12,310 12,310
---- ------- ------- -------
BALANCE, DECEMBER 31, 1996.............. 1 4,972 4,973
---- ------- ------- -------
Net loss................................ (3,688) (3,688)
---- ------- ------- -------
BALANCE, FEBRUARY 28, 1997.............. $ 1 $ $ 1,284 $ 1,285
==== ======= ======= =======
Post Acquisition:
Issuance of stock at formation, March
21, 1997............................... 25,000 25,000
Dividends accrued on mandatorily
redeemable preferred stock............. (2,682) (2,682)
Net income.............................. 3,078 3,078
---- ------- ------- -------
BALANCE, DECEMBER 31, 1997.............. -- 25,000 396 25,396
---- ------- ------- -------
Dividends accrued on mandatorily
redeemable preferred stock............. (4,227) (4,227)
Net income.............................. 9,476 9,476
---- ------- ------- -------
BALANCE, DECEMBER 31, 1998.............. $-- $25,000 $ 5,645 $30,645
==== ======= ======= =======

See notes to financial statements.

F-11

HUNTSMAN SPECIALTY CHEMICALS CORPORATION

STATEMENTS OF CASH FLOWS
(In thousands)

CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)....... $12,310 $(3,688) $ 3,078 $ 9,476
Reconciliation to net
cash provided by
(used in) operating
activities:
Depreciation and
amortization......... 465 1,092 25,733 30,482
Deferred income
taxes................ 37,575 4,102 1,917 5,783
Interest on
subordinated note.... 5,272 7,102
Changes in operating
working capital:
Accounts receivable... (3,660) 8,399 (11,766) (1,459)
Inventories........... (7,453) (1,561) 10,763 3,415
Other current assets.. (2,092) 603 (974) 112
Accounts payable...... 7,995 (12,619) (85) 1,978
Other current
liabilities.......... 2,635 1,328 4,861 3,599
Other assets............ 235 (2,709) (1,949) (14,277)
------- ------- -------- -------
Net cash provided by
(used in) operating
activities......... 48,010 (5,053) 36,850 46,211
------- ------- -------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of PO/MTBE
facility............... (508,200)
Capital expenditures.... (1,445) (1,090) (2,067) (10,408)
------- ------- -------- -------
Net cash used in
investing
activities......... (1,445) (1,090) (510,267) (10,408)
------- ------- -------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance
of long-term debt...... 483,200
Repayment of long-term
debt................... (24,690) (43,322)
Issuance of common
stock.................. 25,000
Intercompany investments
and advances from (to)
Texaco (net)........... (46,565) 6,143
------- ------- -------- -------
Net cash provided by
(used in) financing
activities......... (46,565) 6,143 483,510 (43,322)
------- ------- -------- -------
INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS.............. -- -- 10,093 (7,519)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD... -- -- 10,093
------- ------- -------- -------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD......... $ -- $ -- $ 10,093 $ 2,574
======= ======= ======== =======
SUPPLEMENTAL SCHEDULE OF
NONCASH FINANCING
ACTIVITIES:
In conjunction with the
purchase of the
facilities, the Company
issued preferred stock
to Texaco.............. $ 65,000
========

See notes to financial statements.

F-12

HUNTSMAN SPECIALTY CHEMICALS CORPORATION

NOTES TO FINANCIAL STATEMENTS

1.ACQUISITIONS

General--The accompanying financial statements include the accounts of
Huntsman Specialty Chemicals Corporation (the "Company" or "Huntsman"),
which was formed on December 26, 1996. Effective March 1, 1997 (the
"Effective Date") for financial accounting purposes, the Company purchased
from Texaco, Inc. its propylene oxide ("PO") and methyl tertiary butyl
ether ("MTBE") business, known as the "PO/MTBE business" for $573.2
million, subject to a working capital adjustment (the "Acquisition"). The
Acquisition closed on March 21, 1997.

The financial statements for the year ended December 31, 1996 and the two
months ended February 28, 1997 present on a historical cost basis the
assets, liabilities, revenues and expenses related to Texaco Chemical Inc.
("TCI" or the "Predecessor Company"), a wholly-owned subsidiary of Texaco
Inc., which includes the PO/MTBE business that was included in the
Acquisition. These Predecessor Company financial statements exclude
certain assets held under the Citibank lease (see Note 12).

To finance the Acquisition, the Company entered into a $350 million Credit
Agreement with a group of financial institutions, a $135 million Term Loan
Agreement and issued a $75 million Subordinated Note to BASF. The Company
also issued preferred stock to Texaco with an aggregate liquidation
preference of $65 million at the date of issuance. Cumulative dividends of
5.5% to 6.5% of the liquidation preference (which equals redemption price)
will accrue and be payable commencing July 15, 2002. The Company may
redeem the preferred stock at any time, subject to restrictions, and is
required to redeem the stock prior to April 15, 2008. Additionally, prior
to the Acquisition, the Company received an equity contribution from its
parent company, Huntsman Specialty Chemicals Holdings Corporation, in the
amount of $25 million.

The sources and applications of funds required to consummate the
Acquisition are summarized below in thousands of dollars.

Sources of Funds:
Senior Credit Facilities:
Revolving Credit Facility(1)................................... $ --
Term Loan A.................................................... 150,000
Term Loan B.................................................... 70,000
Term Loan C.................................................... 70,000
Term Loan........................................................ 135,000
BASF Subordinated Note(2)........................................ 58,200
Equity contribution.............................................. 25,000
Seller Preferred Stock........................................... 65,000
--------
Total.......................................................... $573,200
========
Uses of Funds:
Payment of the Acquisition Price................................. $560,700
Transaction fees and expenses(3)................................. 12,500
--------
Total.......................................................... $573,200
========

F-13

--------
(1) The Revolving Credit Facility provided for maximum borrowings of up to
$60 million.
(2) The BASF Subordinated Note had an original principal amount of $75
million, for financial reporting purposes, the note was recorded at
its estimated fair value of $58.2 million.
(3) Total transaction fees and expenses totaled $15.0 million, of which
$9.6 million was paid on March 21, 1997. The remainder was paid using
the excess funds obtained by the notes, the equity contribution and
funds provided by operations.

The Acquisition has been accounted for as a purchase transaction, and,
accordingly, the financial statements subsequent to the Effective Date
reflect the purchase price, including transaction costs allocated to
tangible and intangible assets acquired and liabilities assumed based on
their estimated fair values as of the Effective Date.

The allocation of the $572.5 million purchase price (after working capital
adjustment and including fees and expenses) is summarized as follows in
thousands of dollars:

Current assets..................................................... $ 68,569
Plant and equipment................................................ 410,122
Other noncurrent assets............................................ 121,405
Liabilities assumed................................................ (27,547)
--------
Total............................................................ $572,549
========

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business--The Company markets and sells products: (1) PO,
(2) Glycols, and (3) MTBE, which it manufactures at its facility in Port
Neches, Texas (the "Facility").

Revenue Recognition--The Company generates revenues through sales in the
open market, raw material conversion agreements and long-term supply
contracts. The Company recognizes revenues as the products are shipped.

Cash Flow Information--Highly liquid investments with an original maturity
of three months or less when purchased are considered to be cash
equivalents. The Company paid $31 million and $33 million in interest
expense for the period and the year ended December 31, 1997 and 1998,
respectively. The Company paid $10 thousand in state taxes during 1998.

Supplemental Non-cash Information--In 1996, TCI had an MTBE sales
agreement with Huntsman in which it purchased MTBE from Huntsman at a
price which may have been greater than market. Texaco Inc. absorbed any
additional costs and reimbursed TCI through intercompany investments and
advances.

Financial Instruments--The carrying amount reported in the balance sheet
for cash and cash equivalents, accounts receivable, and accounts payable
approximates fair value because of the immediate or short-term maturity of
these financial instruments. The carrying value of the Revolving Credit
Facility and the Term Loans approximate fair value since they bear
interest at a floating rate plus an applicable margin. The fair value of
the Subordinated Note, $64 million and $75 million at December 31, 1997
and 1998, respectively, was derived based on rates currently available to
the Company for debt instruments of similar terms.

F-14

recognized as an adjustment to interest expense. The related amount
payable to or receivable from counterparties is included in accounts
receivable or accrued liabilities. Gains and losses on terminations of
interest rate agreements are deferred and amortized over the lesser of the
remaining term of the original contract or the life of the debt. The
premiums paid for the interest rate agreements are included as other
assets and are amortized to expense over the term of the agreements.

The fair values of derivative financial instruments are the amounts at
which they could be settled, based on estimates obtained from dealers.
Such amounts as of December 31, 1997 and 1998 were as follows in
thousands:

1997 1998
------------------- -------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
-------- ---------- -------- ----------

Pay fixed swaps..................... $(840) $(2,182)
Interest rate caps purchased........ $ 736 221 $641 61
Interest rate collars purchased..... 1,139 124 927 (3,610)

Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.

Carrying Value of Long-Term Assets--The Company evaluates the carrying
value of long-term assets based upon current and anticipated undiscounted
cash flows, and recognizes an impairment when such estimated cash flows
will be less than the carrying value of the asset. Measurement of the
amount of impairment, if any, is based upon the difference between
carrying value and fair value.

Inventories--Inventories of petrochemical products are stated at cost,
determined on the weighted average method. Inventories are valued at the
lower of cost or market. Materials and supplies are stated at average
cost. Prior to March 1, 1997, MTBE was valued at market price as of the
date produced.

Plant and Equipment and Depreciation and Amortization--Depreciation of
plant and equipment is provided generally on the group plan, using the
straight-line method, with depreciation based on a 5% composite rate for
all classes of property.

Effective March 1, 1997, periodic maintenance and repairs applicable to
manufacturing facilities are accounted for on the prepaid basis by
capitalizing the cost of the turnaround and amortizing the costs over the
estimated period until the next turnaround. Normal maintenance and repairs
of all other plant and equipment are charged to expense as incurred.
Renewals, betterments and major repairs that materially extend the useful
life of the assets are capitalized, and the assets replaced, if any, are
retired.

Prior to March 1, 1997, periodic maintenance and repairs applicable to
manufacturing facilities were accounted for on an accrual basis.

When capital assets representing complete groups of property are disposed
of, the difference between the disposal proceeds and net book value is
credited or charged to income. When miscellaneous assets are disposed of,
the difference between asset cost and salvage value is charged or credited
to accumulated depreciation.

F-15

Interest expense capitalized as part of plant and equipment was $77
thousand and $441 thousand for the period and the year ended December 31,
1997 and 1998, respectively

Intangible assets--Intangible assets are stated at their fair market
values at the time of the Acquisition and are amortized using the
straight-line method over their estimated useful lives of five to fifteen
years or over the life of the related agreement and are included in "Other
assets."

Preferred Stock--In conjunction with the Acquisition, the Company issued
preferred stock to Texaco with an aggregate liquidation preference of $65
million. The preferred stock has a cumulative dividend rate of 5.5%, 6.5%
or a combination thereof of the liquidation preference per year, which is
adjusted on April 15th of each year, based on the Company's cash flow in
the previous year. During 1998, $35 million of the preferred stock accrued
dividends at the rate of 6.5% and the remainder at 5.5%. Unpaid cumulative
dividends will compound at a rate of 5.5% or 6.5% and are payable
commencing July 15, 2002. The Company may redeem the preferred stock at
any time, subject to restrictions, and is required to redeem the stock
prior to April 15, 2008.

Environmental Expenditures--Environmental related restoration and
remediation costs are recorded as liabilities and expensed when site
restoration and environmental remediation and clean-up obligations are
either known or considered probable and the related costs can be
reasonably estimated. Other environmental expenditures, which are
principally maintenance or preventative in nature, are recorded when
expended and are expensed or capitalized as appropriate.

Income Taxes--The Company files a consolidated federal income tax return
with its ultimate parent. The Company has entered into a tax allocation
agreement with its ultimate parent whereby the Company is charged or
credited for an amount that would have been applicable had the Company
filed a separate consolidated federal income tax return.

Deferred income taxes are provided for temporary differences between
financial statement income and taxable income using the asset and
liability method in accordance with Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes."

See Note 8--For Predecessor Company Income Tax Policy.

Research and Development Expenses--Research and development costs are
expensed as incurred.

Earnings per Share--Earnings per share have been omitted from the
statement of operations since such information is not meaningful.

Recently Issued Financial Accounting Standards--In June 1998, the
Financial Accounting Standards Board issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments and hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the balance sheet and measure those instruments
at fair value. SFAS No. 133 is effective for the Company's financial
statements for the year ending December 31, 2000. The Company is currently
evaluating the effects of SFAS No. 133 on its financial statements.

F-16

3.INVENTORIES

Inventories as of December 31, 1997 and 1998 consisted of the following in
thousands of dollars:

1997 1998
------- -------

Feedstocks.................................................. $ 7,471 $ 5,175
Unfinished products......................................... 224 1,032
Finished products........................................... 15,127 12,915
------- -------
22,822 19,122
Materials and supplies...................................... 280 565
------- -------
Total....................................................... $23,102 $19,687
======= =======

In the normal course of operations, the Company exchanges raw materials
with other companies for the purpose of reducing transportation costs. No
gains or losses are recognized on these exchanges, and the net open
exchange positions are valued at the Company's cost. Net amounts deducted
from inventory under open exchange agreements owed by the Company at
December 31, 1997 and 1998 were $90 thousand (477,688 pounds of feedstock
and products) and $412 thousand (927,529 pounds of feedstock and products)
respectively, which represent the net amounts payable by the Company under
open exchange agreements.

4.OTHER ASSETS

Other assets at December 31, 1997 and 1998 consisted of the following in
thousands of dollars:

1997 1998
-------- --------

Patents, licenses, and technology........................ $ 90,180 $ 90,180
Other agreements......................................... 17,823 17,823
Non-compete agreements................................... 1,520 1,520
-------- --------
Total intangibles........................................ 109,523 109,523
Accumulated amortization................................. (6,736) (14,820)
-------- --------
Net intangibles.......................................... 102,787 94,703
Capitalized turnaround expense........................... 14,009
Other noncurrent assets.................................. 11,296 9,557
Spare parts inventory.................................... 459 653
-------- --------
Total.................................................... $114,542 $118,922
======== ========

5.ACCRUED LIABILITIES

Accrued liabilities at December 31, 1997 and 1998 consisted of the
following in thousands of dollars:

1997 1998
------- -------

Ad valorem taxes............................................ $ 4,532 $ 6,974
Product rebate accruals..................................... 2,367 4,110
Other miscellaneous accruals................................ 3,337 2,751
------- -------
Total....................................................... $10,236 $13,835
======= =======

F-17

6.LONG-TERM DEBT

Long-term debt as of December 31, 1997 and 1998 consisted of the following
in thousands of dollars:

1997 1998
-------- --------

Senior Credit Facilities:
Revolving Credit Facility
Term Loan A........................................... $126,709 $ 87,935
Term Loan B........................................... 69,300 67,026
Term Loan C........................................... 69,300 67,026
Term Loan............................................... 135,000 135,000
BASF Subordinated Note, face value $75 million,
discounted to a 9.3% effective rate.................... 59,257 60,632
Accrued Interest on BASF Subordinated Note.............. 4,216 9,943
-------- --------
Total................................................... 463,782 427,562
Less current maturities................................. (9,209)
-------- --------
Total long-term debt.................................... $454,573 $427,562
======== ========

The scheduled maturities of long-term debt by year as of December 31, 1998
are as follows (in thousands):

Year ended December 31:
-----------------------

1999............................................................... $ --
2000............................................................... 30,435
2001............................................................... 37,500
2002............................................................... 20,000
2003............................................................... 1,400
Thereafter......................................................... 352,595
--------
Total.............................................................. 441,930
Less discount on BASF note......................................... (14,368)
--------
Total long-term debt............................................... $427,562
========

Senior Credit Facilities--In March 1997, the Company entered into a Bank
Credit Agreement with Bankers Trust Company related to Senior Credit
Facilities in an aggregate principal amount of $350 million. These
facilities consisted of (i) a five-year $60 million revolving credit
facility (the "Revolving Credit Facility"), (ii) a five-year $150 million
aggregate principal amount Term Loan A, a seven-year $70 million aggregate
principal amount Term Loan B and an eight-year $70 million aggregate
principal amount Term Loan C (the "Term Loan A", the "Term Loan B" and the
"Term Loan C" are referred to collectively as the "Senior Term Loans").

The Senior Credit Facilities bear interest at a rate equal to, at the
Company's option, (i) the Reserve adjusted Eurodollar Rate plus an
applicable margin which ranges from 0.625% to 2.0% for the Revolving
Credit Facility and the Term Loan A, 2.00 to 2.50% for the Term Loan B and
2.25 to 2.75% for the Term Loan C, ("Eurodollar Loans") or (ii) the Base
Rate (defined in the Senior Credit Facilities as the higher of the prime
rates of Bankers Trust Company or the sum of the overnight rate on the
federal funds transactions plus 0.5% ) plus the applicable margin, equal
to 1.25% less than the applicable borrowing margin for Eurodollar loans,
but in no event less than 0% ("Prime Rate Loans").

The Revolving Credit Facility requires a commitment fee ranging from
0.225% to 0.5% per annum on the total unused balance. This rate is
determined based on the Company's most recent financial ratios. The rate
during 1997 and 1998 was 0.5%.

F-18

The obligations of the Company under the Senior Credit Facilities are
secured by a first-priority interest in substantially all of the assets of
the Company.

Term Loan--In March 1997, the Company entered into a Term Loan Agreement
with Bankers Trust Company and various lending institutions in the
aggregate principal amount of $135 million (the "Term Loan"). The Term
Loan bears interest at a rate equal to, at the Company's option, (i) the
Eurodollar Rate plus an applicable margin of 3.5% per annum ("Eurodollar
Loans") or (ii) the Base Rate plus the applicable margin, equal to 2.25%
per annum ("Prime Rate Loans").

Interest on Prime Rate Loans is due quarterly and on the date of
conversion of any such Prime Rate Loan to a Eurodollar Loan. Interest on
Eurodollar Loans will be due at the end of the interest period applicable
thereto, and if such interest period is in excess of three months, each
three months.

BASF Subordinated Note--The Company issued to BASF a subordinated note in
the aggregate principal amount of $75 million. Until April 15, 2002,
interest is accrued on the Subordinated Note at 7% per annum and is
included in "Long-term Debt." On April 15, 2002, all accrued interest will
be added to the principal of the Subordinated Note. Such principal balance
will be payable in a single installment on April 15, 2008. Interest
accrued after April 15, 2002 will be payable quarterly, commencing July
15, 2002. For financial reporting purposes, the note was recorded at its
fair value of $58.2 million based on prevailing market rates as of the
Effective Date.

The Senior Credit Facility, the Term Loan and the Subordinated Note
contain restrictive covenants that, among other things and under certain
conditions, restrict the Company's indebtedness, liens, sales/leaseback
transactions, assets sales, capital expenditures, acquisitions,
investments and transactions with affiliates, dividends and other
restricted payments. Additionally, these covenants require that certain
financial ratios be maintained. Management believes the Company was in
compliance as of December 31, 1998.

Interest Rate Contracts--The Company enters into various types of interest
rate contracts in managing interest rate risk on its long-term debt as
indicated below as of December 31, 1998:

. Pay Fixed Swaps--$65 million notional amount, weighted average pay
rate of 6.03%, maturing in 2000.

. Interest Rate Caps--$60 million notional amount, weighted average
cap rate of 8%, maturing in 2002.

. Interest Rate Collars--$125 million notional amount, weighted
average cap rate of 6.99%, weighted average floor rate of 5.67%,
maturing in 2002.

Under interest rate swaps, the Company agrees with other parties to
exchange, at specified intervals, the difference between fixed-rate and
floating-rate interest amounts calculated by reference to an agreed
notional principal amount.

The Company purchases interest rate cap and sells interest rate floor
agreements to reduce the impact of changes in interest rates on its
floating-rate long-term debt. The cap agreements entitle the Company to
receive from counterparties (major banks) the amounts, if any, by which
the Company's interest payments on certain of its floating-rate borrowings
exceed 6.6% to 8.0%. The floor agreement requires the Company to pay to
the counterparty (a major bank) the amount, if any, by which the Company's
interest payments on certain of its floating-rate borrowings are less than
6.0% to 5.26%.

F-19

The Company is exposed to credit losses in the event of nonperformance by
a counterparty to the derivative financial instruments. The Company
anticipates, however, that the counterparties will be able to fully
satisfy obligations under the contracts. Market risk arises from changes
in interest rates.

Predecessor Company--In February 1986, Texaco Inc. and various
subsidiaries entered into a Master Credit Agreement ("Credit Agreement"),
whereby Texaco Inc. and such subsidiaries may, from time to time, be
borrowers or lenders pursuant to the Credit Agreement. The Credit
Agreement was subsequently amended for minor revisions in June 1986,
January 1987 and April 1987. While TCI is not a party to the Credit
Agreement, the financial statements are prepared as if TCI had been a
party to the Credit Agreement with Texaco. As a result, interest is
calculated based on the Short-Term Applicable Federal Rate as published by
the Internal Revenue Service in its Internal Revenue Bulletin. The average
annual interest rates utilized ranged from 5.1% to 6.2% for the periods
presented. Interest accrued during the year and outstanding at year-end
was added to the principal balance of the intercompany account and itself
became interest bearing. Interest income totaled $4,182,000 for the year
ended December 31, 1996. No interest was charged or credited during the
two months ended February 28, 1997.

7.INCOME TAXES

Current................. $(30,932) $(6,137) $ $
Deferred................ 37,575 4,102 1,917 5,783
-------- ------- ------ ------
Total................. $ 6,643 $(2,035) $1,917 $5,783
======== ======= ====== ======

The following schedule reconciles the differences between the United
States federal income taxes at the United State statutory rate to the
Company's provision for income taxes, in thousands of dollars:

United States federal
income taxes at
statutory rate......... $6,634 $(2,003) $1,748 $5,341
State income taxes, net
of federal benefit..... 97 82
Other................... 9 (32) 72 360
------ ------- ------ ------
Total provision
(benefit) income
taxes.................. $6,643 $(2,035) $1,917 $5,783
====== ======= ====== ======
Effective income tax
rate................... 35% 36% 38% 38%
====== ======= ====== ======

F-20

Components of deferred tax assets and liabilities at December 31, 1997 and
1998 are as follows in thousands of dollars:

1997 1998
-------- --------

Deferred tax liabilities:
Plant and equipment................................... $(44,919) $(78,602)
Capitalized turnaround costs.......................... (5,323)
Interest.............................................. (5,460)
Other deferred tax liability.......................... (27) (27)
-------- --------
Total deferred tax liability............................ (44,946) (89,412)
-------- --------
Deferred tax assets:
Intangible assets..................................... 29,081 27,765
Inventories........................................... 655 1,887
Net operating loss carryforward....................... 13,293 52,060
-------- --------
Total deferred tax assets............................... 43,029 81,712
-------- --------
Net deferred tax liability.............................. $ (1,917) $ (7,700)
======== ========

8.RELATED-PARTY TRANSACTIONS

The Company has no employees and relies entirely on third parties to
provide all goods and services necessary to operate the Company's
business. Certain of such goods and services are provided by Huntsman
Petrochemical Corporation ("HPC"), an affiliate of the Company.

Service Agreements--In accordance with various service agreements, the
terms of which range from 10 to 29 years, HPC provides management,
operating, maintenance and other services to the Company. In connection
with those service agreements, the Company paid $27 and $61 million of
fees and expense reimbursements to HPC during the period and year ended
December 31, 1997 and 1998, respectively. Additionally, the Company was
reimbursed $6 million in the period and year ended December 31, 1997 and
1998 by HPC for steam purchased by the Company on HPC's behalf.

Supply Agreements--Additionally, the Company relies on HPC to supply
certain raw materials and to purchase a significant portion of the
facility's output pursuant to various agreements. The Company sold $24 and
$33 million of product to HPC and purchased $43 and $38 million of raw
materials from HPC during the period and year ended December 31, 1997 and
1998, respectively.

Other Related Party Sales--During 1998, the Company purchased $5 million
of raw materials from Huntsman Polymers Corporation.

Receivables and Payables--As of December 31, 1997 and 1998, the Company
had $5 and $3 million, respectively, in trade receivables from HPC and $5
and $11 million, respectively in trade payables to HPC. In addition, the
Company had $2 million in miscellaneous receivables from HPC as of
December 31, 1998, as well as $4 and $6 million in miscellaneous payables
to HPC as of December 31, 1997 and 1998, respectively.

F-21

Predecessor Company--Transactions with the Texaco entities include the
purchase and sale of raw materials and products, and activities involving
administrative support and financing. A summary of transactions between
the Predecessor Company and the Texaco entities and Star Enterprise
(Star), a joint venture partnership of Texaco follows:

Year Ended Two Months Ended
December 31, February 28,
1996 1997
------------ ----------------

Sales and services to:
Texaco entities........................ $ 16,792 $ 2,385
Star................................... 29,790 7,272
-------- -------
Total................................ $ 46,582 $ 9,657
======== =======
Cost of goods sold from:
Texaco entities........................ $ 97,717 $16,642
Star................................... 22,571 1,800
-------- -------
Total................................ $120,288 $18,442
======== =======

The management, professional, technical and administrative services billed
to the Predecessor Company by Texaco entities are summarized below in
thousands of dollars:

Year Ended Two Months Ended
December 31, February 28,
1996 1997
------------ ----------------

Management and Professional(a)........... $ 986 $ 58
Technical(b)............................. 33 3
Administrative(c)........................ 367 62
Research and development................. 1,564 264
------ -----
Total.................................. $2,950 $ 387
====== =====

--------
(a)Primarily Legal, Employee Relations, Finance, Tax and other Corporate
Management.
(b)Primarily Computer and Communications costs.
(c)Primarily Accounting Services.

Insurance coverage for the Predecessor Company was provided by Texaco's
worldwide risk management program arranged through Heddington Insurance
Limited ("Heddington"), an indirect wholly owned captive insurance
subsidiary of Texaco Inc. Texaco Inc. charges the participating companies
for their proportionate share of the premiums charged by Heddington to
Texaco Inc. based upon various risk factors and other estimates determined
by Texaco's management. Accordingly, the Company's cost for insurance
premiums is charged to expense as incurred, and is included in the above
table in cost of goods sold. Such premiums totaled $1,817,000 in 1996 and
$307,000 for the two months ended February 28, 1997.

The Predecessor Company is a member of the Texaco Inc. consolidated United
States income tax return group. The income tax return group operates under
a formal agreement whereby each member of this group is allocated its
share of the consolidated United States income tax provision or benefit
based on what the member's income tax provision or benefit would have been
had the member filed a separate return and made the same tax elections.
Excluded from such allocation, and therefore from the Company's financial
statements, are any Federal alternative minimum tax payments made by
Texaco Inc. in excess of regular tax, which are recorded by Texaco Inc.,
offset by a reduction of deferred income taxes, and are available to
reduce future regular income tax payments. In any event, as the
Predecessor Company assets and liabilities, rather than stock, were sold
to Huntsman, the Federal alternative minimum tax

F-22

credits will remain with Texaco Inc. Current taxes are charged or credited
to expense and are reflected as related party payables or receivables
until settled after the applicable tax returns have been filed.

9.ENVIRONMENTAL MATTERS

The Company's operations are subject to extensive environmental laws and
regulations concerning emissions to air, discharges to surface and
subsurface waters and the generation, storage, handling, transportation,
treatment, disposal and remediation of hazardous substances and other
waste materials ("Environmental Laws"). The Company's production
facilities require operating permits that are subject to revocation,
modification and renewal. Violations of Environmental Laws or permit
requirements can result in substantial fines and civil or criminal
sanctions. The operation of any chemical manufacturing plant entails risk
of adverse environmental effects, including exposure to chemical products,
by-products and waste from the Company's operations, and there can be no
assurance that material costs or liabilities will not be incurred to
rectify any such damage. In addition, potentially significant expenditures
could be required in order to comply with Environmental Laws and permit
requirements that may be adopted or imposed in the future.

The Company believes that there is existing contamination under the
property resulting from the operation from about 1920 to 1950 of the
unlined earthen crude oil storage tanks on the property and from
contaminated groundwater emanating from adjacent property formerly owned
by Texaco and now owned by HPC. The Purchase Agreement provides that
Texaco will generally be responsible, for a period of eleven years
following the Closing Date for up to $40 million of costs incurred with
respect to all other conditions related to the property that existed on
the Closing Date related to air, land, soil surface, subsurface strata or
groundwater that were not in compliance with Environmental Laws as in
effect as of the Closing Date. The Company, however, is generally
responsible for the first $3 million of such costs as well as for the
first $50,000 of such costs incurred per claim. The Purchase Agreement
further provides that, subject to certain limitations, the Company will be
responsible for such conditions to the extent (i) that Texaco is not
responsible, or (ii) such conditions were caused or arose after the
Closing Date.

It is the Company's belief that the total cost of remediation of all
contamination existing on the property will be less than the $40 million
cap on Texaco's indemnity obligations. However, there can be no assurance
that the cost of remediation will not exceed this amount, that the cost of
remediation will not be covered by Texaco indemnity obligations which
contain certain specified limitations, that Texaco will have the financial
resources to fully perform its responsibilities under the Purchase
Agreement or that the Company will not be required to incur expenses for
liabilities under environmental laws or for environmental remediation
before such time as Texaco pays any liability for which it is ultimately
held responsible. In any such event, the Company may be required to incur
significant liabilities. In addition, no assurance can be given that
Texaco will not seek to challenge its liability under the Purchase
Agreement, that the eleven year period of limitation with respect to
certain costs incurred for the remediation of contamination will not
expire before remediation costs are incurred pursuant to an Environmental
Law in effect as of the Closing Date or that remediation will not be
required pursuant to an Environmental Law enacted after the Closing Date.

10.EMPLOYEE BENEFIT PLANS

Active employees of the Predecessor Company participated in various
Texaco-sponsored benefit plans. The costs of the savings, health care and
life insurance plans relative to employees' active services were shared by
the Predecessor Company and its employees. Texaco Inc. charges the
participating companies for their proportionate share of these costs, and
accordingly, the Predecessor Company's costs for these plans were charged
to expense as incurred.

F-23

Employee Stock Ownership Plans--Texaco sponsors a Thrift Plan for the
benefit of its salaried employees. Amendments to the thrift Plan in 1988
created an Employee Stock Ownership Plan ("ESOP") feature. The ESOP
purchased 833,333 1/3 shares of Series B ESOP Convertible Preferred Stock
("Series B") from Texaco Inc. for $600 per share, or an aggregate purchase
price of $500 million, Texaco Inc. guaranteed the loan made to the ESOP,
which was used to acquire the shares of Series B.

The Thrift Plan is designed to provide a participant with a maximum
benefit of approximately 6% of base pay, which is payable in shares of
Series B. Participants may partially convert their Series B into common
stock of Texaco Inc. beginning at age 55, or may elect full conversion
upon retirement or separation from service with Texaco Inc. or a
participating company.

The Predecessor Company recorded ESOP expense of $46,000 in 1996 and
$8,000 for the two months ended February 28, 1997.

Pension Plans--The Predecessor Company employees participated in Texaco
Inc. and other subsidiary-sponsored pension plans. Generally, these plans
provided defined pension benefits based on final average pay. However, the
level of benefits and terms of vesting vary among plans. Amounts charged
to pension expense, as well as amounts funded, were generally based on
actuarial studies. Pension plan assets were administered by trustees and
are principally invested in equity and fixed income securities and
deposits with insurance companies.

The total expense for the Predecessor Company's participation in these
pension plans was $122,000 in 1996 and $19,000 for the two months ended
February 28, 1997.

Other Postretirement Benefits--The Predecessor Company employees
participated in Texaco Inc. sponsored postretirement plans that provide
health care and life insurance for retirees and eligible dependents. The
Predecessor Company's U.S. health insurance obligation is its fixed dollar
contribution. The plans were unfunded, and the costs are shared by the
Predecessor Company and its employees.

The total expense for postretirement plans other than pensions of the
Predecessor Company was $136,000 in 1996 and $20,000 for the two months
ended February 28, 1997.

Effective with the acquisition, substantially all Predecessor Company
employees became employees of HPC.

11.COMMITMENTS AND CONTINGENCIES

The Company has various purchase commitments for materials and supplies
entered into in the ordinary course of business. These agreements extend
from three to ten years and the purchase price is generally based on
market prices subject to certain minimum price provisions.

The Company is involved in litigation from time to time in the ordinary
course of its business. In management's opinion, none of such litigation
is material to the Company's financial condition or results of operations.

Contingent Liabilities

There were various legal proceedings and claims against TCI which arose in
the ordinary course of business, none of which are material to TCI. Texaco
Inc. subject to terms of the Acquisition, will remain liable for any and
all of TCI's contingent liabilities that arise prior to the date of sale.

F-24

Internal Revenue Service Claims

The Internal Revenue Service ("IRS") has asserted a number of claims
against Texaco Inc. for periods prior to the effective date of the PO/MTBE
operations sale. Notwithstanding the tax sharing agreement, TCI, and each
of the members of the consolidated U.S. income tax return group, is
jointly and severally liable for any potential liability to the IRS.
However, Texaco Inc. will remain primarily liable for the Company's tax
liabilities that arise prior to the date of sale.

12.LEASE COMMITMENTS AND RENTAL EXPENSE

The Predecessor's Company's principal operating asset was a PO/MTBE plant
under lease from Citibank, N.A. and other financial institutions, dated
August 14, 1992. The lease was accounted for as an operating lease. Terms
of the lease include an option for TCI or Texaco to purchase the lease.
The purchase option was exercised prior to the acquisition. The lease
obligation is reflected in the Predecessor Company's statement of income
as rental expense, included in "Cost of Sales", and totaled $34,436,000 in
1996 and $5,523,000 for the two months ended February 28, 1997.

As of December 31, 1996, the Predecessor Company had estimated minimum
commitments of $20,725,000 for the year 1997 for payment of rentals (net
of noncancelable sublease rentals) under the above-mentioned lease which,
at inception, had a noncancelable term of more than one year. Also at
December 31, 1996, TCI had a minimum commitment under this lease of
$489,033,000 for the year 1997 as a residual value guarantee.

13.CUSTOMER INFORMATION

Sales to three non-related customers account for 17%, 18%, and 36% of
sales for the year ended December 31, 1998. Sales to three non-related
customers account for 15%, 20%, and 32% of sales for the period from March
1, 1997 to December 31, 1997. Sales to four non-related customers' account
for 13%, 13%, 18%, and 23% of sales for the period from January 1, 1997 to
February 28, 1997. Sales to four non-related customers account for 12%,
12%, 17%, and 19% of sales for the year ended December 31, 1996.

14.SUBSEQUENT EVENT

In April 1999, the Company, Imperial Chemical Industries Plc (ICI), and
Huntsman ICI Holdings LLC (Holdings) entered into a Contribution Agreement
and certain ancillary agreements under which Huntsman ICI Chemicals LLC
(Huntsman ICI), a wholly owned subsidiary of Holdings, agreed to acquire
certain assets and stock representing ICI's polyurethene chemicals,
selected petrochemicals and titanium dioxide businesses and the business
of the Company. In exchange for transferring its business to Holdings, the
Company will obtain a 60% common equity interest in Holdings and receive
$360 million in cash. The Company will use the cash and any additional
funds from Huntsman Corporation to repay the existing debt and acquire the
preferred stock. In exchange for transferring its businesses to Holdings,
ICI will receive a 30% equity interest in Holdings, an aggregate of
approximately $2,022 million in cash and approximately $508 million of
accreted value at issuance from the discount notes of Holdings. In
addition, BT Capital Investors, L.P., Chase Equity Associates, L.P. and
The Goldman Sachs Group, Inc. will acquire the remaining 10% interest in
Holdings for $90 million in cash.

The Company and ICI have agreed to indemnify each other for specific
claims and losses with respect to the transaction. Between the third and
fourth anniversary of the closing of the transaction, the Company has the
option to purchase, and ICI has the right to require the Company to
purchase, ICI's 30% interest in Holdings.

Huntsman ICI has negotiated senior credit facilities and subordinated
credit facilities totaling approximately $2.9 billion to fund the
transaction.

The transaction is expected to close June 30, 1999 and is subject to
regulatory and ICI shareholder approval.

F-25

HUNTSMAN SPECIALTY CHEMICALS CORPORATION

BALANCE SHEETS (Unaudited)
(Thousands of Dollars)

December 31, March 31,
1998 1999
ASSETS ------------ ---------

CURRENT ASSETS:
Cash and cash equivalents (Note 2).................... $ 2,574 $ 9,845
Accounts receivable................................... 45,787 47,443
Related party accounts receivable..................... 4,710 4,918
Inventories (Notes 2 and 3)........................... 19,687 23,435
Other current assets.................................. 862 431
-------- --------
Total current assets................................ 73,620 86,072
-------- --------
PLANT AND EQUIPMENT (Notes 1 and 2):
Land and improvements................................. 3,575 3,575
Buildings and equipment............................... 415,268 415,268
Construction-in-progress.............................. 3,753 4,917
-------- --------
Total plant and equipment........................... 422,596 423,760
Less accumulated depreciation and amortization........ (37,505) (42,721)
-------- --------
Plant and equipment, net............................ 385,091 381,039
-------- --------
OTHER ASSETS (Notes 2 and 4)............................ 118,922 116,270
-------- --------
TOTAL................................................... $577,633 $583,381
======== ========

See notes to financial statements.

F-26

HUNTSMAN SPECIALTY CHEMICALS CORPORATION

BALANCE SHEETS (Unaudited)
(Thousands of Dollars)

December 31, March 31,
1998 1999
LIABILITIES AND STOCKHOLDER'S EQUITY ------------ ---------

CURRENT LIABILITIES:
Accounts payable (Note 2)............................. $ 9,394 $ 14,767
Related party accounts payable........................ 16,588 10,646
Accrued liabilities (Note 5).......................... 13,835 10,660
Deferred income taxes................................. 3,436 5,252
-------- --------
Total current liabilities........................... 43,253 41,325
-------- --------
LONG-TERM DEBT (Notes 1, 2 and 6)
Senior Credit Facilities.............................. 221,987 221,987
Term Loan............................................. 135,000 135,000
BASF note............................................. 70,575 72,327
-------- --------
Total long-term debt................................ 427,562 429,314
-------- --------
DEFERRED INCOME TAXES (Note 2).......................... 4,264 4,263
MANDATORILY REDEEMABLE PREFERRED STOCK
($1 par value; 65,000 shares authorized, issued and
outstanding-stated at liquidation value of $1,000 per
share, including $7,959 and $6,909 in unpaid
dividends, respectively)............................. 71,909 72,959
-------- --------
Total liabilities................................... 546,988 547,861
-------- --------
COMMITMENTS AND CONTINGENCIES (Notes 7 and 8)
STOCKHOLDER'S EQUITY:
Common stock ($.01 par value; 2,500 shares authorized,
issued and outstanding)
Additional paid-in capital............................ 25,000 25,000
Retained earnings..................................... 5,645 10,520
-------- --------
Total stockholder's equity.......................... 30,645 35,520
-------- --------
TOTAL................................................... $577,633 $583,381
======== ========

See notes to financial statements.

F-27

HUNTSMAN SPECIALTY CHEMICALS CORPORATION

STATEMENTS OF INCOME (Unaudited)
(Thousands of Dollars)

3 Months Ended
March 31,
----------------
1998 1999
------- -------

REVENUE:
Sales (Note 9).............................................. $64,113 $58,851
Related party sales......................................... 9,654 10,781
Tolling fees................................................ 12,182 13,730
------- -------
Total revenue............................................. 85,949 83,362
COST OF SALES................................................. 72,018 61,738
------- -------
GROSS PROFIT.................................................. 13,931 21,624
EXPENSES (Note 7):
Sales, general & administrative............................. 1,722 1,846
Research and development.................................... 765 858
------- -------
Total expenses............................................ 2,487 2,704
------- -------
OPERATING INCOME.............................................. 11,444 18,920
INTEREST EXPENSE (Note 6)..................................... 10,433 9,539
INTEREST INCOME............................................... (233) (176)
------- -------
INCOME BEFORE INCOME TAXES.................................... 1,244 9,557
INCOME TAX EXPENSE (Note 2)................................... 467 3,632
------- -------
NET INCOME.................................................... $ 777 $ 5,925
======= =======

See notes to financial statements.

F-28

HUNTSMAN SPECIALTY CHEMICALS CORPORATION

STATEMENTS OF CASH FLOWS (Unaudited)
(Thousand of Dollars)

3 Months Ended
March 31,
----------------
1998 1999
------- -------

CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income................ $ 777 $ 5,925
Reconciliation to net cash
provided by operating ac-
tivities:
Depreciation and amorti-
zation................. 7,504 7,877
Deferred income taxes... 234 1,815
Interest on subordinated
note................... 1,711 1,752
Changes in operating work-
ing capital:
Accounts receivable..... (4,638) (1,864)
Inventories............. (4,820) (3,748)
Other current assets.... 488 431
Accounts payable........ (74) (569)
Other current liabili-
ties................... (2,389) (3,175)
Other assets.............. 1,426 (9)
------- -------
Net cash provided by op-
erating activities..... 219 8,435
------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures...... (1,697) (1,164)
------- -------
Net cash used in invest-
ing activities......... (1,697) (1,164)
------- -------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS....... (1,478) 7,271
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD........ 10,093 2,574
------- -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD.............. $ 8,615 $ 9,845
======= =======

See notes to financial statements.

F-29

HUNTSMAN SPECIALTY CHEMICALS CORPORATION

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. ACQUISITIONS

General--The accompanying financial statements include the accounts of
Huntsman Specialty Chemicals Corporation (the Company), which was formed
on December 26, 1996. Effective March 1, 1997 (the "Effective Date") for
financial accounting purposes, the Company purchased from Texaco, Inc. its
propylene oxide ("PO") and methyl tertiary butyl ether ("MTBE") business,
known as the "PO/MTBE business" for $573.2 million, subject to a working
capital adjustment (the "Acquisition"). The Acquisition closed on March
21, 1997.

To finance the Acquisition, the Company entered into a $350 million Credit
Agreement with a group of financial institutions, a $135 million Term Loan
Agreement and issued a $75 million Subordinated Note to BASF. The Company
also issued preferred stock to Texaco with an aggregate liquidation
preference of $65 million. Cumulative dividends of 5.5% to 6.5% of the
liquidation preference will accrue and be payable commencing July 15,
2002. The Company may redeem the preferred stock at any time, subject to
restrictions, and is required to redeem the stock prior to April 15, 2008.
Additionally, prior to the Acquisition, the Company received an equity
contribution from its parent company, Huntsman Specialty Chemicals
Holdings Corporation, in the amount of $25 million.

The sources and applications of funds required to consummate the
Acquisition are summarized below in thousands of dollars.

Sources of Funds:
Senior Credit Facilities:
Revolving Credit Facility (1)................................. $ --
Term Loan A................................................... 150,000
Term Loan B................................................... 70,000
Term Loan C................................................... 70,000
Term Loan....................................................... 135,000
BASF Subordinated Note (2)...................................... 58,200
Equity contribution............................................. 25,000
Seller Preferred Stock.......................................... 65,000
--------
Total......................................................... $573,200
========
Uses of Funds:
Payment of the Acquisition Price................................ $560,700
Transaction fees and expenses (3)............................... 12,500
--------
Total......................................................... $573,200
========

--------
(1) The Revolving Credit Facility provided for maximum borrowings of up to
$60 million.
(2) The BASF Subordinated Note had an original principal amount of $75
million, for financial reporting purposes, the note was recorded at its
estimated fair value of $58.2 million.
(3) Total transaction fees and expenses totaled $15.0 million, of which
$9.6 million was paid on March 21, 1997. The remainder was paid using
the excess funds obtained by the notes, the equity contribution and
funds provided by operations.

F-30

The allocation of the $572.5 million purchase price (after working capital
adjustment and including fees and expenses) is summarized as follows in
thousands of dollars:

Current assets...................................................... $ 68,569
Plant and equipment................................................. 410,122
Other noncurrent assets............................................. 121,405
Liabilities assumed................................................. (27,547)
--------
Total............................................................. $572,549
========

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business--The Company markets and sells products: (1) PO,
(2) Glycols, and (3) MTBE, which it manufactures at its facility in Port
Neches, Texas (the "Facility").

Cash Flow Information--Highly liquid investments with an original maturity
of three months or less when purchased are considered to be cash
equivalents. The Company paid $8.8 million and $8.0 million in interest
expense for the quarter ended March 31, 1998 and 1999 respectively.

Financial Instruments--The carrying amount reported in the balance sheet
for cash and cash equivalents, accounts receivable, and accounts payable
approximates fair value because of the immediate or short-term maturity of
these financial instruments. The carrying value of the Revolving Credit
Facility and the Term Loans approximate fair value since they bear
interest at a floating rate plus an applicable margin. The fair value of
the Subordinate Note was derived based on rates currently available to the
Company for debt instruments of similar terms.

The Company enters into certain derivative financial instruments as part
of its interest rate risk management. Interest rate swaps, caps, collars
and floors are classified as matched transactions. The differential to be
paid or received as interest rates change is accrued and recognized as an
adjustment to interest expense. The related amount payable to or
receivable from counterparties is included in accounts receivable or
accrued liabilities. Gains and losses on terminations of interest rate
agreements are deferred and amortized over the lesser of the remaining
term of the original contract or the life of the debt. The premiums paid
for the interest rate agreements are included as other assets and are
amortized to expense over the term of the agreements.

F-31

Periodic maintenance and repairs applicable to manufacturing facilities
are accounted for on the prepaid basis by capitalizing the cost of the
turnaround and amortizing the costs over the estimated period until the
next turnaround. Normal maintenance and repairs of all other plant and
equipment are charged to expense as incurred. Renewals, betterments and
major repairs that materially extend the useful life of the assets are
capitalized, and the assets replaced, if any, are retired.

Interest expense capitalized as part of plant and equipment was $56
thousand and $168 thousand for the quarter ended March 31, 1998 and 1999,
respectively.

Preferred Stock--In conjunction with the Acquisition, the Company issued
preferred stock to Texaco with an aggregate liquidation preference of $65
million. The preferred stock has a cumulative dividend rate of 5.5%, 6.5%
or a combination thereof of the liquidation preference per year, which is
adjusted on April 15th of each year, based on the Company's cash flow in
the previous year. During 1998, $35 million of the preferred stock accrued
dividends at the rate of 6.5% and the remainder at 5.5%. Unpaid cumulative
dividends will compound at a rate of 5.5% or 6.5% and is payable
commencing July 15, 2002. The Company may redeem the preferred stock at
any time, subject to restrictions, and is required to redeem the stock
prior to April 15, 2008.

F-32

Unaudited Interim Financial Information--The accompanying unaudited
financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, have been made which are
necessary to fairly present the financial position of the Company as of
March 31, 1999 and the results of its operations and cash flows for the
interim periods ended March 31, 1998 and 1999. The results of the interim
period should not be regarded as necessarily indicative of results that
may be expected for the entire year. The financial information presented
herein should be read in conjunction with the audited financial statements
and notes for the year ended December 31, 1998, included elsewhere in the
offering circular.

Recently Issued Financial Accounting Standards--In June 1998, the
Financial Accounting Standards Board issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments and hedging
activities. It requires that an entity recognize all derivatives as assets
or liabilities in the balance sheet and measure those instruments at fair
value. SFAS No. 133 is effective for the Company's financial statements
for the year ending December 31, 2000. The Company is currently evaluating
the effects of SFAS No. 133 on its financial statements.

3.INVENTORIES

Inventories consisted of the following in thousands of dollars:

December 31, March 31,
1998 1999
------------ ---------

Feedstocks............................................ $ 5,175 $ 8,278
Unfinished products................................... 1,032 2,231
Finished products..................................... 12,915 12,427
------- -------
19,122 22,936
Materials and supplies................................ 565 499
------- -------
Total............................................... $19,687 $23,435
======= =======

In the normal course of operations, the Company exchanges raw materials
with other companies for the purpose of reducing transportation costs. No
gains or losses are recognized on these exchanges, and the net open
exchange positions are valued at the Company's cost. Net amounts deducted
from inventory under open exchange agreements owed by the Company at
December 31, 1998 and March 31, 1999 were $412 thousand (927,529 pounds of
feedstock and products) and $817 thousand (420,837 pounds of feedstock and
products), respectively, which represent the net amounts payable by the
Company under open exchange agreements.

F-33

4.OTHER ASSETS

Other assets consisted of the following in thousands of dollars:

December 31, March 31,
1998 1999
------------ ---------

Patents, licenses, and technology..................... $ 90,180 $ 90,180
Other agreements...................................... 17,823 17,823
Non-compete agreements................................ 1,520 1,520
-------- --------
Total intangibles................................... 109,523 109,523
Accumulated amortization.............................. (14,820) (16,841)
-------- --------
Net intangibles....................................... 94,703 92,682
Capitalized turnaround expense........................ 14,009 13,235
Other noncurrent assets............................... 9,557 9,521
Spare parts inventory................................. 653 832
-------- --------
Total............................................... $118,922 $116,270
======== ========

5.ACCRUED LIABILITIES

Accrued liabilities consisted of the following in thousands of dollars:

December 31, March 31,
1998 1999
------------ ---------

Ad valorem taxes....................................... $ 6,974 $ 2,514
Product rebate accruals................................ 4,110 3,308
Other miscellaneous accruals........................... 2,751 4,838
------- -------
Total................................................ $13,835 $10,660
======= =======

6.LONG-TERM DEBT

Long-term debt consisted of the following in thousands of dollars:

December 31, March 31,
1998 1999
------------ ---------

Senior Credit Facilities:
Revolving Credit Facility
Term Loan A......................................... $ 87,935 $ 87,935
Term Loan B......................................... 67,026 67,026
Term Loan C......................................... 67,026 67,026
Term Loan............................................. 135,000 135,000
BASF Subordinated Note, face value $75 million, dis-
counted to a 9.3% effective rate..................... 60,632 60,976
Accrued Interest on BASF Subordinated Note............ 9,943 11,351
-------- --------
Total Long-Term Debt................................ $427,562 $429,314
======== ========

F-34

The Senior Credit Facilities bear interest at a rate equal to, at the
Company's option, (i) the Reserve adjusted Eurodollar Rate plus an
applicable margin which ranges from 0.625% to 2.0% for the Revolving
Credit Facility and the Term Loan A, 2.00 to 2.50% for the Term Loan B and
2.25 to 2.75% for the Term Loan C, ("Eurodollar Loans") or (ii) the Base
Rate (defined in the Senior Credit Facilities as the higher of the prime
rates of Bankers Trust Company or the sum of the overnight rate on the
federal funds transactions plus 0.5%) plus the applicable margin, equal to
1.25% less than the applicable borrowing margin for Eurodollar loans, but
in no event less than 0% ("Prime Rate Loans").

The Revolving Credit Facility requires a commitment fee ranging from
0.225% to 0.5% per annum on the total unused balance. This rate is
determined based on the Company's most recent financial ratios.

The obligations of the Company under the Senior Credit Facilities are
secured by a first-priority interest in substantially all of the assets of
the Company.

Interest Rate Contracts--The Company enters into various types of interest
rate contracts in managing interest rate risk on its long-term Under
interest rate swaps, the Company agrees with other parties to exchange, at
specified intervals, the difference between fixed-rate and floating-rate
interest amounts calculated by reference to an agreed notional principal
amount.

F-35

7.ENVIRONMENTAL MATTERS

The Company's operations are subject to extensive environmental laws and
regulations concerning emissions to airs, discharges to surface and
subsurface waters and the generation, storage, handling, transportation,
treatment, disposal and remediation of hazardous substances and other
waste materials ("Environmental Laws"). The Company's production
facilities require operating permits that are subject to revocation,
modification and renewal. Violations of Environmental Laws or permit
requirements can result in substantial fines and civil or criminal
sanctions. The operation of any chemical manufacturing plant entails risk
of adverse environmental effects, including exposure to chemical products,
by-products and waste from the Company's operations, and there can be no
assurance that material costs or liabilities will not be incurred to
rectify any such damage. In addition, potentially significant expenditures
could be required in order to comply with Environmental Laws and permit
requirements that may be adopted or imposed in the future.

F-36

8.COMMITMENTS AND CONTINGENCIES

9.CUSTOMER INFORMATION

Sales to three non-related customers account for 31%, 20%, and 16% of
sales for the quarter ended March 31, 1998. Sales to three non-related
customers account for 23%, 17%, and 15% of sales for the quarter ended
March 31, 1999.

F-37

INDEPENDENT AUDITORS REPORT

The Board of Directors
Imperial Chemical Industries PLC

We have audited the accompanying combined balance sheets representing an
aggregation of financial information from the individual companies and
operations of the businesses of Imperial Chemical Industries PLC ("ICI")
relating to polyurethane chemicals, titanium dioxide and selected
petrochemicals ("the Businesses") as at 31 December 1997 and 1998 and their
related combined profit and loss accounts, cash flow statements and statements
of total recognised gains and losses for each of the years in the three year
period ended 31 December 1998. Our responsibility is to express an opinion on
these combined financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards in the United Kingdom and the United States. These standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of the Businesses as of
31 December 1997 and 1998, and the results of their operations and their cash
flows for each of the years in the three year period ended 31 December 1998, in
conformity with generally accepted accounting principles in the United Kingdom.

Generally accepted accounting principles in the United Kingdom vary in certain
significant respects from generally accepted accounting principles in the
United States. Application of generally accepted accounting principles in the
United States would have affected results of operations for each of the years
in the three year period ended 31 December 1998 and net investment as of 31
December 1997 and 1998, to the extent summarised in Note 30 of the combined
financial statements.

KPMG Audit Plc
Chartered Accountants
London, England
2 June 1999

F-38

COMBINED PROFIT AND LOSS ACCOUNTS

Years ended 31 December
-------------------------
Notes 1996 1997 1998
----- --------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Turnover.............................. 3 2,534 2,337 2,011
Operating costs....................... 5 (2,368) (2,288) (1,888)
Other operating income................ 5 6 5 8
------ ------ ------
Trading profit before operating
exceptional items.................... 3,5 172 54 131
Operating exceptional items........... 4 (11) (56) (10)
------ ------ ------ ---
Trading profit/(loss) after operating
exceptional items.................... 5 161 (2) 121
Income from fixed asset investment--
dividends............................ 2 1 1
Exceptional items--profit/(loss) on
sale or closure of operations........ 4 -- 23 (4)
------ ------ ------ ---
Profit on ordinary activities before
interest............................. 163 22 118
Net interest payable.................. 8 (78) (69) (71)
------ ------ ------ ---
Profit/(loss) on ordinary activities
before taxation...................... 85 (47) 47
Taxation on profit/(loss) on ordinary
activities........................... 9 (29) (15) 12
------ ------ ------ ---
Profit/(loss) on ordinary activities
after taxation....................... 56 (62) 59
Attributable to minorities............ (3) (1) (1)
------ ------ ------ ---
Net profit/(loss) for the financial
year................................. 53 (63) 58
====== ====== ====== ===

COMBINED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES

Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Net profit/(loss) for the financial year........ 53 (63) 58
Currency translation differences on foreign
currency net
investments.................................... (88) (51) --
Other movements................................. -- (2) 7
--- ---- ---
(88) (53) 7
--- ---- ---
Total recognised gains/(losses) relating to the
year........................................... (35) (116) 65
=== ==== ===

The accompanying notes form an integral part of these combined financial
statements.

F-39

COMBINED BALANCE SHEETS

At 31 December
-------------------
Notes 1997 1998
----- --------- ---------
(Pounds)m (Pounds)m

Fixed assets
Tangible assets...................................... 10 958 1,041
Investments--Participating and other interests....... 11 7 6
----- ------
965 1,047
Current assets
Stocks............................................... 12 236 250
Debtors.............................................. 13 340 296
Investments and short-term deposits--unlisted........ 2 2
Cash at bank......................................... 24 53 51
----- ------
631 599
----- ------
Total assets......................................... 1,596 1,646
----- ------
Creditors due within one year
Short-term borrowings................................ 14 (20) (12)
Current instalments of loans......................... 16 (9) (4)
Financing due to ICI................................. 16 -- (866)
Other creditors...................................... 15 (408) (345)
----- ------
(437) (1,227)
----- ------
Net current assets/(liabilities)..................... 194 (628)
----- ------
Total assets less current liabilities................ 1,159 419
----- ------
Creditors due after more than one year
Loans................................................ 16 (10) (8)
Financing due to ICI................................. 16 (866) --
Other creditors...................................... 15 (7) (9)
----- ------
(883) (17)
Provisions for liabilities and charges............... 17 (77) (72)
Deferred income...................................... (11) (11)
----- ------
(971) (100)
----- ------
Net assets........................................... 188 319
===== ======

Net investment (page F-37)........................... 184 316

Minority interests--equity........................... 4 3
----- ------
188 319
===== ======

The accompanying notes form anintegral part of these combined financial
statements.

F-40

COMBINED CASH FLOW STATEMENTS

Years ended 31 December
-----------------------------
Notes 1996 1997 1998
----- --------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Net cash inflow from operating
activities............................... 18 292 111 200
Returns on investments and servicing of
finance.................................. 19 (13) (12) (12)
Taxation.................................. (41) (22) (56)
---- ---- ----
238 77 132
Capital expenditure and financial
investment............................... 20 (187) (169) (130)
Disposals................................. 21 -- 31 --
---- ---- ----
Cashflow before financing................. 51 (61) 2
Net movement in financing................. 22 (57) 67 (4)
---- ---- ----
Increase/(decrease) in cash............... 24 (6) 6 (2)
==== ==== ====

RECONCILIATION OF MOVEMENTS IN COMBINED NET INVESTMENT

Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Net profit/(loss) for the financial year......... 53 (63) 58
Distributions and transfers (to)/from ICI, net of
tax............................................. (3) 10 21
--- --- ---
Profit/(loss) retained for year.................. 50 (53) 79
Other recognised gains/(losses) related to the
year--exchange differences on translation of
opening investment and other non cash
movements....................................... (42) 2 53
--- --- ---
Increase/(decrease) in net investment............ 8 (51) 132
Combined net investment at beginning of year..... 227 235 184
--- --- ---
Combined net investment at end of year........... 235 184 316
=== === ===

The net assets above have been reduced as of 31 December, in each year by a
cumulative amount of goodwill written off of (Pounds)35m.

There are no significant statutory or contractual restrictions on the
distribution of current year income of subsidiary undertakings. Undistributed
profits are, in the main, employed in the businesses of these companies. The
undistributed income of the Businesses overseas may be liable to overseas taxes
and/or United Kingdom taxation (after allowing for double taxation relief) if
they were to be distributed as dividends.

The cumulative exchange gains and losses on the translation of foreign
currency financial statements into pounds sterling are taken into account in
the above reconciliation of movements in combined net investment.

The accompanying notes form anintegral part of these combined financial
statements.

F-41

NOTES TO THE COMBINED FINANCIAL STATEMENTS

1 Basis of preparation

The accompanying Combined Financial Statements for the three years ended 31
December 1998 have been prepared in connection with the disposal of ICI's
Tioxide, Polyurethanes and selected petrochemicals businesses (the
"Businesses") in order to show the financial position, results of operations,
total recognised gains and losses and cash flows of the Businesses. They have
been prepared on a carve-out basis by aggregating the historical financial
information of the Businesses as if they had formed a discrete operation under
common management for the entire three year period. The Businesses are not
separate legal entities and have not been separately financed. Distributions
and transfers out of retained income made by the Businesses have been treated
as reductions in net investment (i.e. as if they were dividends).

Management overheads

Certain management overheads and other similar costs amounting to
(Pounds)13m in 1996, (Pounds)23 million in 1997 and (Pounds)15 million in 1998
have been attributed to the Businesses. Allocations were based on a combination
of the sales of the Businesses as a percentage of ICI's sales and the net
assets of the Businesses as a percentage of ICI's net assets. In all cases
management believes the method used was reasonable. The allocated costs are
included in operating costs in the Combined Profit and Loss Accounts and have
been treated as non-cash movements through net investment.

Indebtedness and interest

The Combined Financial Statements include interest on the indebtedness
between ICI and the Businesses of (Pounds)866 million as if such indebtedness
had been in place for all periods presented. This debt has been determined by
management to be an appropriate amount to include in the Combined Financial
Statements because it is the amount of long-term debt that is expected to be
outstanding on the date the transaction is completed. The charge for interest
on such indebtedness is based on the weighted average interest rates of
selected, representative long-term borrowings of ICI in each year. The interest
charge was (Pounds)73 million in 1996, (Pounds)66 million in 1997 and
(Pounds)69 million in 1998, reflecting interest rates of 8.5% in 1996, 7.6% in
1997 and 8.0% in 1998. For cash flow purposes, interest on such indebtedness
and associated tax relief to the extent that it exceeds the actual interest
paid to ICI in the relevant period has been treated as a non-cash movement
through net investment.

Taxation

The tax charge attributable to the Businesses is based on the charge
recorded by individual legal entities and an appropriate allocation of the tax
charge incurred by ICI where activities of both the Businesses and ICI were
carried out within a single legal entity. There are no material differences
between the tax charge allocated and that which would have arisen on a stand
alone basis. Only actual tax payments by individual legal entities of the
Businesses have been included in the Combined Cash Flow Statements; payments by
ICI legal entities in respect of tax attributable to activities of the
Businesses have been treated as non-cash movements through net investment.

2 Principal accounting policies

These Combined Financial Statements have been prepared under the historical
cost convention and UK accounting standards applicable for those periods
presented. Accordingly, the provisions of Financial Reporting Standard (FRS) 12
and FRS 14 and all of the disclosure requirements of FRS 13 have not been
applied. Accounting policies conform with UK Generally Accepted Accounting
Principles (UK GAAP). The principal accounting policies which have been applied
are set out below.

F-42

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

Turnover

Turnover excludes intra-Business turnover and value added taxes. Revenue
is recognised at the point at which title passes.

Depreciation

The book value of each tangible fixed asset is written off to its residual
value evenly over its estimated remaining life. Reviews are made annually of
the estimated remaining lives of individual productive assets, taking account
of commercial and technological obsolescence as well as normal wear and tear.
Under this policy it becomes impracticable to calculate average asset lives
exactly; however, the total lives approximate to 28 years for buildings and 20
years for plant and equipment. Depreciation of assets qualifying for grants is
calculated on their full cost.

Pension costs

The pension costs relating to UK retirement plans are assessed in
accordance with the advice of independent qualified actuaries. The amounts so
determined include the regular cost of providing the benefits under the plans
which should be a level percentage of current and expected future earnings of
the employees covered under the plans. Variations from the regular pension
cost are spread on a systematic basis over the estimated average remaining
service lives of current employees in the plans. With minor exceptions, non-UK
subsidiaries recognise the expected cost of providing pensions on a systematic
basis over the average remaining service lives of employees in accordance with
the advice of independent qualified actuaries.

Research and development

Research and development expenditure is charged to profit in the year in
which it is incurred.

Government grants

Grants related to expenditure on tangible fixed assets are credited to
profit over a period approximating to the lives of qualifying assets. The
grants shown in the balance sheets consist of the total grants receivable to
date less the amounts so far credited to profit.

Foreign currencies

Profit and loss accounts in foreign currencies are translated into
sterling at average rates for the relevant accounting periods. Assets and
liabilities are translated at exchange rates ruling at the date of the
Businesses' balance sheet. Exchange differences on short-term foreign currency
borrowings and deposits are included with net interest payable. Exchange
differences on all other transactions, except relevant foreign currency loans,
are taken to trading profit. In the Businesses' accounts, exchange differences
arising on consolidation of the net investments in overseas subsidiary
undertakings and associated undertakings are taken to net investment in the
balance sheet. Differences on relevant foreign currency loans are taken to net
investment and offset against the differences on net investment in the balance
sheet.

Stock valuation

Finished goods are stated at the lower of cost and net realisable value,
raw materials and other stocks at the lower of cost and replacement price; the
first in, first out or an average method of valuation is used. In determining
cost for stock valuation purposes, depreciation is included but selling
expenses and certain overhead expenses are excluded.

F-43

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

Environmental liabilities

The Businesses are exposed to environmental liabilities relating to past
operations, principally in respect of soil and groundwater remediation costs.
Provisions for these costs are made when expenditure on remedial work is
probable and the cost can be estimated within a reasonable range of possible
outcomes.

Associated undertakings and joint ventures

Associated undertakings and joint ventures are undertakings in which the
Businesses hold a long-term interest and over which they actually exercise
significant influence. Interests in joint arrangements that are not entitles
are included proportionately in the accounts of the investing entity.

Taxation

The charge for taxation is based on the profit for the year and takes into
account taxation deferred because of timing differences between the treatment
of certain items, including post-retirement benefits, for taxation and for
accounting purposes. However, no provision is made for taxation deferred by
reliefs unless there is reasonable evidence that such deferred taxation will be
payable in the future.

Goodwill

On the acquisition of a business, fair values are attributed to the net
assets acquired. Goodwill arises where the fair value of the consideration
given for a business exceeds such net assets. For purchased goodwill arising on
acquisitions after 31 December 1997 goodwill is capitalised and amortised
through the profit and loss acount over a period of 20 years unless it is
considered that it has a materially different useful life. For goodwill arising
on acquisitions prior to 31 December 1997 purchased goodwill was charged
directly to net investment in the year of acquisition. On subsequent disposal
or termination of a previously acquired business, the profit or loss recognised
on disposal or termination is calculated after charging the amount of any
related goodwill previously taken to net investment.

F-44

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

3 Segmental information

Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Turnover
By business
Polyurethanes.................................... 907 860 816
Tioxide.......................................... 618 547 574
Petrochemicals................................... 1,047 980 659
----- ----- -----
2,572 2,387 2,049
Inter-business................................... (38) (50) (38)
----- ----- -----
2,534 2,337 2,011
===== ===== =====

Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

By geographical location of operating units
United Kingdom................................... 1,511 1,214 818
Continental Europe............................... 845 781 751
USA.............................................. 481 494 509
Other Americas................................... 101 97 83
Asia Pacific..................................... 224 184 143
Other countries.................................. 42 37 42
----- ----- -----
3,204 2,807 2,346
Inter-area eliminations.......................... (670) (470) (335)
----- ----- -----
2,534 2,337 2,011
===== ===== =====

Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

By geographical location of customer
United Kingdom................................... 900 760 560
Continental Europe............................... 772 755 638
USA.............................................. 377 386 408
Other Americas................................... 118 117 118
Asia Pacific..................................... 266 236 204
Other countries.................................. 101 83 83
----- ----- -----
2,534 2,337 2,011
===== ===== =====

F-45

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

3. Segmental information (continued)

Profit/(loss) before interest
Trading profit/(loss) and taxation after
before exceptional items exceptional items
----------------------------- -----------------------------
Years ended 31 December Years ended 31 December
----------------------------- -----------------------------
1996 1997 1998 1996 1997 1998
--------- --------- --------- --------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m

By business
Polyurethanes........... 113 77 90 115 101 87
Tioxide................. -- (23) 68 (11) (54) 58
Petrochemicals.......... 59 -- (27) 59 (25) (27)
--- --- --- --- --- ---
172 54 131 163 22 118
=== === === === === ===

By geographical location
of operating units
United Kingdom.......... 85 36 13 80 13 11
Continental Europe...... 31 (19) 56 30 (22) 48
USA..................... 49 30 44 47 30 44
Other Americas.......... 9 5 6 7 4 5
Asia Pacific............ (8) (1) 7 (8) (6) 5
Other countries......... 6 3 5 7 3 5
--- --- --- --- --- ---
172 54 131 163 22 118
=== === === === === ===

At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m

Total assets less current liabilities
By business
Net operating assets
Polyurethanes.............................................. 480 523
Tioxide.................................................... 629 661
Petrochemicals............................................. 100 102
----- -----
1,209 1,286
Net non-operating liabilities............................... (50) (867)
----- -----
1,159 419
===== =====

F-46

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

3. Segmental information (continued)

At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m

By geographical location of operating units
Net operating assets
United Kingdom............................................. 438 420
Continental Europe......................................... 371 439
USA........................................................ 263 290
Other Americas............................................. 15 19
Asia Pacific............................................... 105 100
Other...................................................... 17 18
----- -----
1,209 1,286
Net non-operating liabilities............................... (50) (867)
----- -----
1,159 419
===== =====

Net operating assets comprise tangible fixed assets, stocks and total
operating debtors(note 13) less current operating creditors (note 15).

Years ended 31 December
-----------------------
1996 1997 1998
------- ------- -------

Employees--average number of people employed
By business
Polyurethanes........................................... 2,139 2,225 2,172
Tioxide................................................. 3,611 3,383 3,243
Petrochemicals.......................................... 946 947 952
------- ------- -------
6,696 6,555 6,367
======= ======= =======

Years ended 31 December
-----------------------
1996 1997 1998
------- ------- -------

By geographical location of operating units
United Kingdom.......................................... 2,517 2,421 2,261
Continental Europe...................................... 2,515 2,595 2,614
USA..................................................... 545 436 444
Other Americas.......................................... 76 153 161
Asia Pacific............................................ 712 628 558
Other countries......................................... 331 322 329
------- ------- -------
6,696 6,555 6,367
======= ======= =======

F-47

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

4 Exceptional items before taxation

Years ended 31 December
-----------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Operating exceptional items
Tioxide:
Rationalisation of operations, including
severance (1996 (Pounds)4m; 1997 (Pounds)10m;
1998 (Pounds)7m).............................. (11) (14) (10)
Settlement of dispute with supplier............ -- (17) --
Petrochemicals:
Asset impairment............................... -- (25) --
--- --- ---
(11) (56) (10)
--- --- ---
Credited/(charged) after trading profit
Profit/(loss) on sale or closure of operations:
Disposal of Polyurethanes business in Australia.. -- 25 --
Other disposals.................................. -- (2) (4)
--- --- ---
-- 23 (4)
--- --- ---
Exceptional items within profit on ordinary
activities before taxation...................... (11) (33) (14)
=== === ===

F-48

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

5 Trading profit

Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Trading profit before exceptional items
Turnover......................................... 2,534 2,337 2,011
------ ------ ------
Operating costs
Cost of sales.................................. (1,989) (1,911) (1,535)
Distribution costs............................. (100) (128) (143)
Research and development....................... (51) (49) (39)
Administration and other expenses.............. (228) (200) (171)
------ ------ ------
(2,368) (2,288) (1,888)
Other operating income
Government grants.............................. 1 2 2
Royalty income................................. 1 -- 3
Other income................................... 4 3 3
------ ------ ------
6 5 8
------ ------ ------
Trading profit................................... 172 54 131
====== ====== ======
Operating costs include:
Depreciation................................... 93 88 76
------ ------ ------
Gross profit, as defined by UK Companies Act
1985.......................................... 545 426 476
------ ------ ------
Trading profit after exceptional items
Turnover......................................... 2,534 2,337 2,011
------ ------ ------
Operating costs
Cost of sales.................................. (1,996) (1,965) (1,544)
Distribution costs............................. (102) (128) (143)
Research and development....................... (51) (49) (39)
Administration and other expenses.............. (230) (202) (172)
------ ------ ------
(2,379) (2,344) (1,898)
Other operating income
Government grants.............................. 1 2 2
Royalty income................................. 1 -- 3
Other income................................... 4 3 3
------ ------ ------
6 5 8
------ ------ ------
Trading profit/(loss)............................ 161 (2) 121
====== ====== ======
Operating costs include:
Depreciation................................... 93 113 76
------ ------ ------
Gross profit, as defined by UK Companies Act
1985.......................................... 538 372 467
------ ------ ------

6 Note of historical cost profits and losses

There were no material differences between reported profits and losses on
ordinary activities before tax in 1996, 1997 and 1998.

F-49

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

7 Staff costs

Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Staff costs:
Salaries...................................... 181 166 163
Social security costs......................... 28 24 27
Pension costs................................. 13 15 15
Other employment costs........................ 3 3 2
--- --- ---
225 208 207
Less amounts allocated to capital and to
provisions set up in previous years............ (2) (3) --
Severance costs charged in arriving at profit
before tax..................................... 5 10 8
--- --- ---
Employee costs charged in arriving at profit
before tax..................................... 228 215 215
=== === ===

8 Net interest payable

Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Interest payable and similar charges
Interest on loans
External........................................ 3 3 1
Other ICI businesses............................ 73 66 69
--- --- ---
76 69 70
Interest on short-term borrowings................. 3 2 2
--- --- ---
79 71 72
Interest receivable and similar income
External........................................ (1) (2) (1)
--- --- ---
78 69 71
=== === ===

9 Taxation on profit on ordinary activities

Years ended 31 December
-----------------------------------------------------------------------------------------------------
1996 1997 1998
--------------------------------- --------------------------------- ---------------------------------
Before Before Before
exceptional Exceptional exceptional Exceptional exceptional Exceptional
items items Total items items Total items items Total
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m

United Kingdom
taxation
Corporation
tax............ (11) (3) (14) 17 -- 17 (30) -- (30)
Deferred
taxation....... 4 -- 4 -- -- -- 2 -- 2
--- --- --- --- --- --- --- --- ---
(7) (3) (10) 17 -- 17 (28) -- (28)
--- --- --- --- --- --- --- --- ---
Overseas taxation
Overseas taxes.. 33 -- 33 31 (10) 21 24 (4) 20
Deferred
taxation....... 6 -- 6 (23) -- (23) (4) -- (4)
--- --- --- --- --- --- --- --- ---
39 -- 39 8 (10) (2) 20 (4) 16
--- --- --- --- --- --- --- --- ---
32 (3) 29 25 (10) 15 (8) (4) (12)
=== === === === === === === === ===

UK and overseas taxation has been provided on the profit/(loss) earned for
the periods covered by the accounts, UK corporation tax has been provided at
the rate of 31% (1997 31.5%; 1996 33%).

F-50

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

Deferred taxation

The amounts of deferred taxation accounted for as the balance sheet data
and the potential amounts of deferred taxation are disclosed below.

Year ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Accounted for at balance sheet date
Timing differences on UK capital allowances and
depreciation................................... 70 63 83
Miscellaneous timing differences................ (3) (22) (43)
--- --- ---
67 41 40
--- --- ---
Not accounted for at balance sheet data
Timing differences on UK capital allowances and
depreciation................................... 64 82 81
Miscellaneous timing differences................ (11) (49) (36)
--- --- ---
53 33 45
--- --- ---
Full potential deferred taxation................ 120 74 85
=== === ===

F-51

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

10Tangible fixed assets

Payments
to account
and assets
Land and Plant and in course of
buildings equipment construction Total
--------- --------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m

Cost
At 1 January 1997 ...... 191 1,396 188 1,775
Capital expenditure..... -- -- 171 171
Transfer of assets into
use.................... 2 77 (79)
Exchange adjustments.... (20) (80) (14) (114)
Disposals and other
movements.............. (2) (28) (1) (31)
--- ----- ---- -----
At 31 December 1997..... 171 1,365 265 1,801
Capital expenditure..... -- -- 135 135
Transfer of assets into
use.................... 4 261 (265)
Exchange adjustments.... 4 27 2 33
Disposals and other
movements.............. (1) (36) -- (37)
--- ----- ---- -----
At 31 December 1998 178 1,617 137 1,932
--- ----- ---- -----
Depreciation
At 1 January 1997 ...... 59 726 785
Charge for year......... 7 106 113
Exchange adjustments.... (5) (28) (33)
Disposals and other
movements.............. (1) (21) (22)
--- ----- -----
At 31 December 1997..... 60 783 843
Charge for year......... 5 71 76
Exchange adjustments.... 2 9 11
Disposals and other
movements.............. (1) (38) (39)
--- ----- -----
At 31 December 1998..... 66 825 891
=== ===== =====
Net book value at 31
December 1997.......... 111 582 265 958
=== ===== ==== =====
Net book value at 31
December 1998.......... 112 792 137 1,041
=== ===== ==== =====

The depreciation charge of (Pounds)113m in 1997, shown above, includes
(Pounds)25m charged to exceptional items relating to provisions for impairment.

Included in land and buildings is (Pounds)22m (1997 (Pounds)22m) in respect
of the cost of land which is not subject to depreciation.

F-52

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m

The net book value of land and buildings comprises:
Freeholds................................................. 84 86
Long leases (over 50 years unexpired)..................... 27 26
--- ---
111 112
=== ===

11 Investments in participating and other interests

At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m

Associated undertakings--non equity accounted shares
Cost
At beginning of year........................................ 7 7
Exchange adjustments........................................ -- (1)
--- ---
At 31 December.............................................. 7 6
=== ===

12 Stocks

At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m

Raw materials and consumables............................... 91 106
Stocks in process........................................... 9 11
Finished goods and good for resale.......................... 136 133
--- ---
236 250
=== ===

13 Debtors

At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m

Amounts due within one year
Trade debtors--external..................................... 122 97
Trade debtors--other ICI businesses......................... 182 158
Taxation recoverable........................................ 6 10
Other prepayments and accrued income........................ 6 10
Other debtors--external..................................... 20 19
--- ---
336 294
=== ===
Amounts due after one year
Other debtors--external..................................... 4 2
--- ---
340 296
=== ===

F-53

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

Non operating debtors included in the above

At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m

Amounts due within one year
Taxation recoverable........................................ 3 3
Other debtors............................................... 2 --
--- ---
5 3
Amounts due after one year
Taxation recoverable........................................ 3 7
--- ---
8 10
=== ===

14 Short-term borrowings

At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m

Bank borrowings--Unsecured.................................. 20 12
=== ===

15 Other creditors

At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m
Amounts due within one year

Trade creditors--external................................... 158 184
Trade creditors--other ICI businesses....................... 60 26
Corporate taxation.......................................... 91 53
Value added and payroll taxes and social security........... 17 8
Accruals.................................................... 43 42
Other creditors............................................. 39 32
--- ---
408 345
=== ===
Amounts due after one year
Pension liabilities......................................... 2 3
Other creditors............................................. 5 6
--- ---
7 9
=== ===
Non-operating creditors included in the above

Amounts due within one year
Corporate taxation.......................................... 91 53
Other creditors............................................. -- 1
--- ---
91 54
=== ===
Amounts due after one year
Pension liabilities......................................... 2 3
Other creditors............................................. 3 --
--- ---
5 3
=== ===

F-54

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

16 Loans

At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m

Creditors due within one year
Current instalment of loans................................. 9 4
Financing due to ICI........................................ -- 866
--- ---
9 870
=== ===
Creditors due after more than one year
Loans....................................................... 10 8
Financing due to ICI........................................ 866 --
--- ---
876 8
--- ---
885 878
=== ===
Secured loans
US dollars.................................................. 4 --
Other currencies............................................ 1 --
--- ---
Total secured............................................... 5 --
--- ---
Secured by fixed charge................................... 4 --
Secured by floating charge................................ 1 --
--- ---
Unsecured loans
US dollars.................................................. -- --
Other foreign currencies.................................... 14 12
--- ---
14 12
Financing due to ICI (see note below)....................... 866 866
--- ---
Total unsecured............................................. 880 878
--- ---
Total loans................................................. 885 878
=== ===
Loan maturities
Bank loans
Loans or instalments thereof are repayable:
From 2 to 5 years from balance sheet date................. 7 5
From 1 to 2 years......................................... 3 3
--- ---
Total due after more than one year.......................... 10 8
Total due within one year................................... 9 4
--- ---
19 12
=== ===
Other loans
Loans or instalments thereof are repayable:
From 1 to 2 years from balance sheet date................. 866 --
=== ===
Within one year........................................... -- 866
=== ===

Financing due to ICI includes the indebtedness assumed by the Businesses on
1 January 1999 as if it had been in place throughout the period.

F-55

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m

Total loans
Loans or instalments thereof are repayable:
From 2 to 5 years from balance sheet date................. 7 5
From 1 to 2 years......................................... 869 3
--- ---
Total due after more than one year.......................... 876 8
Total due within one year................................... 9 870
--- ---
Total loans................................................. 885 878
=== ===

17 Provisions for liabilities and charges

Deferred Unfunded Employee Other
taxation pensions benefits provisions Total
--------- --------- --------- ---------- ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m

At 1 January 1997.......... 67 13 17 14 111
Profit and loss account.... (23) -- 1 1 (21)
Net amounts paid or
becoming current.......... -- (2) (1) (8) (11)
Exchange and other
movements................. (3) -- -- 1 (2)
--- --- --- --- ---
At 31 December 1997........ 41 11 17 8 77
Profit and loss account.... (2) (5) 2 3 (2)
Net amounts paid or
becoming current.......... -- (1) (1) (2) (4)
Exchange and other
movements................. 1 -- -- -- 1
--- --- --- --- ---
At 31 December 1998........ 40 5 18 9 72
=== === === === ===

18 Net cash inflow from operating activities

Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Trading profit/(loss)............................. 161 (2) 121
Exceptional items within trading profit........... 11 56 10
--- --- ---
Trading profit before exceptional items .......... 172 54 131
Depreciation...................................... 93 88 76
Stocks decrease/(increase) ....................... (18) 56 (11)
Debtors decrease.................................. 28 9 52
Creditors increase/(decrease)..................... 45 (62) (36)
Other movements, including exchange............... (4) (2) (1)
--- --- ---
316 143 211
Outflow relating to exceptional items............. (24) (32) (11)
--- --- ---
292 111 200
=== === ===

Outflow related to exceptional items includes expenditure charged to
exceptional provisions relating to business rationalisation, settlement of a
dispute with a supplier and for sale or closure of operations, including
severance and other employee costs.

F-56

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

19 Returns on investments and servicing of finance

Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Dividends received from associated
undertakings................................... 1 -- --
Interest received............................... 32 8 10
Interest paid................................... (45) (19) (21)
Dividends paid by subsidiary undertakings to
minority shareholders.......................... (1) (1) (1)
--- --- ---
(13) (12) (12)
=== === ===

20 Capital expenditure and financial investment

Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Purchase of tangible fixed assets............... (188) (173) (130)
Purchase of fixed asset investments other than
associated undertakings or joint ventures ..... (1) -- --
Sale of tangible fixed assets................... 2 4 --
---- ---- ----
(187) (169) (130)
==== ==== ====

21 Disposals

Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Cash inflow from disposal of Polyurethanes
business in Australia.......................... -- 31 --
=== === ===

The Polyurethanes business in Australia contributed (Pounds)3m and
(Pounds)2m to the trading profit of the Businesses in 1996 and 1997,
respectively.

F-57

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

22 Financing

Short-term
Distributions Financing borrowings
and transfers due to other than
to ICI * ICI Sub Total Loans overdrafts Sub Total Total
------------- --------- --------- --------- ---------- --------- ---------
Notes 16 16 24
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m

At 1 January 1997....... (1,101) 866 (235) (27) - (27) (262)
Exchange adjustments.... 53 - 53 - - - 53

Financing
------ --- ---- --- --- --- ----
New finance........... (69) - (69) - (7) (7) (76)
Finance repaid........ 1 - 1 8 8 9
------ --- ---- --- --- --- ----
Cash flow............... (68) - (68) 8 (7) 1 (67)
Acquisitions and
disposals.............. 3 - 3 - - - 3
Other non-cash changes.. 63 - 63 - - - 63
------ --- ---- --- --- --- ----
At 31 December 1997..... (1,050) 866 (184) (19) (7) (26) (210)
Exchange adjustments.... (7) - (7) - - - (7)

Financing
------ --- ---- --- --- --- ----
New finance........... (23) - (23) - - (23)
Finance repaid........ 14 - 14 7 6 13 27
------ --- ---- --- --- --- ----
Cash flow............... (9) - (9) 7 6 13 4
Other non-cash changes.. (116) - (116) - - - (116)
------ --- ---- --- --- --- ----
At 31 December 1998..... (1,182) 866 (316) (12) (1) (13) (329)
====== === ==== === === === ====

- --------
* The distributions and transfers to ICI and related interest paid are not
indicative of the dividends and interest that the Businesses will pay as an
independent managed and financed entity.

The Businesses have not been charged with any financing costs in respect of
amounts included within Net investment during the period covered by the
Combined Financial Statements.

23 Analysis of net debt

Current
asset
Cash Financing -- debt investments Net debt
--------- ----------------------------------------- ----------- ---------
Short-term
borrowings
Financing other than
due to ICI Loans overdrafts Total
---------- --------- ---------- ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m

At 1 January 1997....... 39 (866) (27) - (893) 3 (851)
Exchange adjustments.... (5) - - - - (1) (6)
Cash flow............... 6 - 8 (7) 1 - 7
--- ---- --- --- ---- --- ----
At 31 December 1997..... 40 (866) (19) (7) (892) 2 (850)
Exchange adjustments.... 2 - - - - - 2
Cash flow............... (2) - 7 6 13 - 11
--- ---- --- --- ---- --- ----
At 31 December 1998..... 40 (866) (12) (1) (879) 2 (837)
=== ==== === === ==== === ====

F-58

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

24 Cash and short-term borrowings

Short-term borrowings Cash
Cash at ------------------------------ (at bank and
bank Overdrafts Other Total Net total overdraft)
--------- ---------- --------- --------- --------- ------------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m

At 1 January 1997....... 50 (11) -- (11) 39 39
Exchange adjustments.... (6) 1 -- 1 (5) (5)
Cash flow............... 9 (3) (7) (10) (1) 6
--- --- --- --- --- ---
At 31 December 1997..... 53 (13) (7) (20) 33 40
Exchange adjustments.... -- 2 -- 2 2 2
Cash flow............... (2) -- 6 6 4 (2)
--- --- --- --- --- ---
At 31 December 1998..... 51 (11) (1) (12) 39 40
=== === === === === ===

25 Leases

Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Rentals under operating leases, charged as an
expense in the profit and loss account
Hire of plant and machinery................... 7 4 3
Other......................................... 3 1 1
--- --- ---
10 5 4
=== === ===

Land and buildings Other assets
Years ended 31 December Years ended 31 December
----------------------------- -----------------------------
1996 1997 1998 1996 1997 1998
--------- --------- --------- --------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m

Commitments under
operating leases to pay
rentals during the year
following the year of
these accounts,
analysed according to
the period in which
each lease expires
Expiring within 1
year................. 1 1 1 -- -- 1
Expiring in years 2 to
5.................... 1 -- -- 2 2 1
Expiring thereafter... 1 1 1 -- -- --
--- --- --- --- --- ---
3 2 2 2 2 2
=== === === === === ===

Years ended 31 December
-----------------------------
1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Obligations under operating leases comprise
Rentals due within 1 year...................... 5 4 4
--- --- ---
Rentals due after more than 1 year
From 1 to 2 years.............................. 4 4 3
From 2 to 3 years.............................. 3 3 3
From 3 to 4 years.............................. 3 2 2
From 4 to 5 years.............................. 2 2 2
After 5 years from balance sheet date.......... 14 11 8
--- --- ---
26 22 18
--- --- ---
31 26 22
=== === ===

F-59

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

26 Pensions and other post retirement benefits

Pensions

The majority of the Businesses' employees are covered by retirement plans.
These plans are generally of the defined benefit type under which benefits are
based on employees' years of service and average final remuneration and are
funded through separate trustee-administered funds. Formal independent
actuarial valuations of ICI's main plans are undertaken regularly, normally at
least triennially and adopting the projected unit method.

The actuarial assumptions used to calculate the projected benefit
obligation of ICI's pension plans vary according to the economic conditions of
the country in which they are situated. It is usually assumed that, over the
long term, the annual rate of return on scheme investments will be higher than
the annual rate of increase in pensionable remuneration and in present and
future pension in payments.

The weighted average discount rate used in determining the actuarial
present values of the benefit obligations was 7.3% (1997 7.8%). The weighted
average expected long-term rate of return on investments was 7.9% (1997 8.0%).
The weighted average rate of increase of future earnings was 4.9% (1997 5.0%).

The actuarial value of the fund assets of these plans at the date of the
latest actuarial valuations was sufficient to cover 104% (1997 107%) of the
benefits that had accrued to members after allowing for expected future
increases in earnings; their market value was (Pounds)462m (1997 (Pounds)427m).

The total pension cost for the Businesses for 1998 was (Pounds)15m (1997
(Pounds)15m; 1996 (Pounds)13m). Accrued pension costs amounted to (Pounds)3m
(1997 (Pounds)2m) and are included in other creditors (note 15); provisions for
the benefit obligation of a small number of unfunded plans amounted to
(Pounds)5m (1997 (Pounds)11m) and are included in provisions for liabilities
and charges - unfunded pensions (note 17).

27 Related party transactions

The following information is provided in accordance with FRS No 8 - Related
Party Transactions, as being material transactions with related parties
during 1998.

Related party: Imperial Chemical Industries PLC and subsidiary
undertakings

Transactions: a) Sales of product (Pounds)124m
b) Sales of services (Pounds)3m
c) Purchases of product (Pounds)13m
d) Purchases of services (Pounds)35m

Related party: Phillips-Imperial Petroleum Ltd (PIP), disclosed as a
principal associated undertaking of Imperial Chemical
Industries PLC.

Transactions: a) Sales of refined products to PIP amounted to
(Pounds)98m.
b) Purchase of refined oil and refining costs from PIP
amounted to (Pounds)29m.
c) Site services and other charges to PIP amounted to
(Pounds)23m.
d) Amount owed to the Group related to the above
transactions amounted to (Pounds)5m.

Related party: ICHEM Insurance Company Limited, a subsidiary undertaking
of Imperial Chemical Industries PLC.

Transactions: Insurance premium paid by the Businesses (Pounds)11.7m.
Insurance claims settled by ICHEM Insurance Company
Limited (Pounds)22.4m.

F-60

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

28 Contingent liabilities and commitments

At 31 December
-------------------
1997 1998
--------- ---------
(Pounds)m (Pounds)m

Commitments for capital expenditure not provided in these
accounts
Contracts placed for future expenditure................. 24 107
Expenditure authorized but not yet contracted........... 1 1
--- ---
25 108
=== ===

The Businesses are involved in various legal proceedings arising out of the
normal course of business. It is not believed that the outcome of these
proceedings will have a material effect on the Businesses' financial position.

The Businesses are also subject to contingencies pursuant to environmental
laws and regulations that in the future may require it to take action to
correct the effects on the environment of prior disposal or release of chemical
substances by the Businesses or other parties. The ultimate requirement for
such actions, and their cost is inherently difficult to estimate, however
provisions have been established at 31 December 1998 in accordance with the
accounting policy in note 2.

Guarantees and contingencies arising in the ordinary course of business,
for which no security has been given, are not expected to result in any
material financial loss.

The Businesses have entered into a number of take-or-pay contracts in
respect of purchases of raw materials and services for varying periods up to
2013. The aggregate present value of significant commitments at 31 December
1998 was approximately (Pounds)420m.

29 Subsequent event

In April 1999 ICI, Huntsman Specialty Chemicals Corporation and Huntsman
ICI Holdings LLC (Holdings) entered into a Contribution Agreement under which
Holdings acquired the businesses of ICI relating to polyurethane chemicals,
titanium dioxide and selected petrochemicals (the "Businesses"). In exchange
for transferring the Businesses, ICI will receive a 30% equity interest in
Holdings and an aggregate of approximately $2,022 million in cash and
approximately $508 million in proceeds from discount notes of Holdings. The
transaction is expected to close on 30 June 1999.

F-61

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

30 Differences between UK and US accounting principles

The Combined Financial Statements are prepared in accordance with United
Kingdom Generally Accepted Accounting Principles (UK GAAP). The significant
differences between UK GAAP and US Generally Accepted Accounting Principles (US
GAAP) which affect net income and net assets are set out below:

(a)Accounting for pension costs

There are four significant differences between UK GAAP and US GAAP in
accounting for pension costs:

(i) SFAS No. 87, "Employers' Accounting for Pensions", requires that
pension plan assets are valued by reference to their fair or
market related values, whereas UK GAAP permits an alternative
measurement of assets, which, in the case of the main UK
retirement plans, is on the basis of the discounted present value
of expected future income streams from the pension plan assets.

(ii)SFAS No. 87, requires measurements of plan assets and obligations
to be made as at the date of financial statements or a date not
more than three months prior to that date. Under UK GAAP,
calculations may be based on the results of the latest actuarial
valuation.

(iii)SFAS No. 87, mandates a particular actuarial method--the
projected unit credit method--and requires that each significant
assumption necessary to determine annual pension cost reflects
best estimates solely with regard to that individual assumption.
UK GAAP does not mandate a particular method, but requires that
the method and assumptions, taken as a whole, should be compatible
and lead to the actuary's best estimate of the cost of providing
the benefits promised.

(iv)Under SFAS No. 87, a negative pension cost may arise where a
significant unrecognised net asset or gain exists at the time of
implementation. This is required to be amortised on a straight-
line basis over the average remaining service period of employees.
Under UK GAAP, the policy is not to recognise pension credits in
its financial statements unless a refund of, or reduction in,
contributions is likely.

(b) Purchase accounting adjustments, including the amortisation and
impairment of goodwill and intangibles

In the Combined Financial Statements, prepared in accordance with UK
GAAP, goodwill arising on acquisitions accounted for under the purchase
method after 1 January 1998, is capitalised and amortised, as it would
be in accordance with US GAAP. Prior to that date such goodwill arising
on acquisitions was and remains eliminated against net investment.
Values were not placed on intangible assets. Additionally, UK GAAP
requires that on subsequent disposal or closure of a previously
acquired asset, any goodwill previously taken directly to net
investment is then charged in the income statement against the income
or loss on disposal or closure. Under US GAAP all goodwill would be
capitalised in the combined balance sheet and amortised through the
profit and loss account over its estimated life not exceeding 40 years.
Also, under US GAAP, it is normal practice to ascribe fair values to
identifiable intangibles. For the purpose of the adjustments to US
GAAP, included below, identifiable intangible assets are amortised to
income over the lower of their estimated lives or 40 years. Provision
is made where there is a permanent impairment to the carrying value of
capitalised goodwill and intangible assets based on a projection of
future undiscounted cash flows.

F-62

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

There is no accounting standard in the UK regarding the capitalisation
of interest and the Businesses do not capitalise interest in the
Combined Financial Statements. Under US GAAP, SFAS No. 34
"Capitalization of Interest Cost", requires interest incurred as part
of the cost of constructing fixed assets to be capitalised and
amortised over the life of the asset.

(d) Restructuring costs

US GAAP requires a number of specific criteria to be met before
restructuring costs can be recognised as an expense. Among these
criteria is the requirement that all the significant actions arising
from the restructuring plan and their completion dates must be
identified by the balance sheet date. Under UK GAAP, prior to the
publication of FRS12, when a decision was taken to restructure, the
necessary provisions were made for severance and other costs.
Accordingly, timing differences, between UK GAAP and US GAAP, arise on
the recognition of such costs.

(e) Deferred taxation

Deferred taxation is provided on a full provision basis under US GAAP.
Under UK GAAP no provision is made for taxation deferred by reliefs
unless there is reasonable evidence that such deferred taxation will be
payable in the foreseeable future.

The following is a summary of the material adjustments to net income and
net equity which would be required if US GAAP had been applied instead of UK
GAAP:

1996 1997 1998
--------- --------- ---------
(Pounds)m (Pounds)m (Pounds)m

Net income after exceptional items--UK GAAP...... 53 (63) 58
Adjustments to conform with US GAAP
Pension expense................................ - (1) (1)
Purchase accounting adjustments
Amortisation of goodwill and intangibles..... (1) (1) (1)
Capitalisation of interest less amortisation
and disposals................................. (1) (3) -
Restructuring costs............................ - - 5
Deferred taxation
Arising on UK GAAP results................... (10) 16 (12)
Arising on other US GAAP adjustments......... -- 2 (1)
--- --- ---
Total US GAAP adjustments...................... (12) 13 (10)
--- --- ---
Net income--US GAAP.............................. 41 (50) 48
=== === ===
Net assets--UK GAAP.............................. 188 319
Adjustments to conform with US GAAP
Purchase accounting adjustments including
goodwill and intangibles...................... 31 30
Capitalisation of interest less amortisation
and disposals................................. 71 71
Restructuring provision........................ - 5
Pension expense................................ (26) (27)
Deferred taxation.............................. (51) (64)
--- ---
Total US GAAP adjustments...................... 25 15
--- ---
Net assets--US GAAP.............................. 213 334
=== ===

F-63

NOTES TO THE COMBINED FINANCIAL STATEMENTS--(Continued)

31 Principal companies and operations

a) Principal ICI subsidiary companies included in the Businesses.

% owned Country Unit name
100 England Tioxide Group Ltd
100 England Tioxide Europe Ltd
100 England Tioxide Group Service Ltd
100 USA Tioxide Americas Inc
100 Canada Tioxide Canada Inc
100 Italy Tioxide Europe Srl
100 Spain Tioxide Europe S.A.
100 France Tioxide Europe SA
100 Malaysia Tioxide (Malaysia) SDN BHD
60 South Africa Tioxide Southern Africa (Pty) Ltd

b) Principal associated companies included in the Businesses.

% owned Country Unit name
50 USA Louisiana Pigment Company, LP

Louisiana Pigment Company, LP is accounted for as a joint arrangement that
is not an entity in these special purpose accounts.

c) Principal operations included in the Businesses.

% owned Country Unit name
100 England ICI Chemicals & Polymers Ltd--Petrochemicals
100 England Imperial Chemical Industries PLC--Polyurethanes
100 USA ICI Americas Inc--Polyurethanes
100 Netherlands ICI Holland BV--Polyurethanes

F-64

32 Supplemental Condensed Combined Financial Information

The payment obligations under the Senior Subordinated Notes (see elsewhere
in the Offering Circular) are guaranteed by certain of the Businesses which are
wholly owned subsidiaries of ICI and will be wholly owned subsidiaries of
Holdings following the transaction described in note 29 (the "Guarantors"). The
guarantees are full, unconditional and joint and several. The Supplemental
Condensed Combined Financial Information sets forth profit and loss account,
balance sheet and cash flow information for the Guarantors and for the other
individual companies and operations of the Businesses (the "Non-Guarantors").
The information reflects the investments of the Guarantors in certain of the
Non-Guarantors using the equity method of accounting. For the purposes of this
Supplemental Condensed Combined Financial Information, the indebtedness between
ICI and the Businesses of (Pounds)866 million and the interest on such
indebtedness and associated tax relief has been reflected within the Non-
Guarantors information.

Supplemental Combined Profit and Loss Account
For the year ended 31 December 1996

Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m

Turnover......................... 131 2,454 (51) 2,534
Operating costs.................. (130) (2,289) 51 (2,368)
Other operating income........... - 6 - 6
---- ------ --- ------
Trading profit before operating
exceptional items............... 1 171 - 172
Operating exceptional items...... - (11) - (11)
---- ------ --- ------
Trading profit after operating
exceptional items............... 1 160 - 161
Income from fixed asset
investment--dividends........... - 2 - 2
Share of loss of consolidated
subsidiaries before interest.... (13) - 13 -
---- ------ --- ------
Profit/(loss) on ordinary
activities before interest...... (12) 162 13 163
Net interest
receivable/(payable)............ 10 (88) - (78)
Share of interest payable of
consolidated subsidiaries....... (17) - 17 -
---- ------ --- ------
Profit/(loss) on ordinary
activities before taxation...... (19) 74 30 85
Taxation on profit/(loss) on
ordinary activities............. (1) (28) - (29)
---- ------ --- ------
Profit/(loss) on ordinary
activities after taxation (20) 46 30 56
Attributable to minorities....... - (3) - (3)
---- ------ --- ------
Net profit/(loss) for the
financial year.................. (20) 43 30 53
==== ====== === ======

F-65

Supplemental Combined Profit and Loss Account
For the year ended 31 December 1997

Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m

Turnover......................... 131 2,267 (61) 2,337
Operating costs.................. (134) (2,215) 61 (2,288)
Other operating income........... - 5 - 5
---- ------ --- ------
Trading profit/(loss) before
operating exceptional items..... (3) 57 - 54
Operating exceptional items...... - (56) - (56)
---- ------ --- ------
Trading profit/(loss) after
operating exceptional items..... (3) 1 - (2)
Income from fixed asset
investment--dividends........... - 1 - 1
Exceptional items--profit on sale
or closure of operations........ - 23 - 23
Share of loss of consolidated
subsidiaries before interest.... (50) -- 50 --
---- ------ --- ------
Profit/(loss) on ordinary
activities before interest...... (53) 25 50 22
Net interest
receivable/(payable)............ 17 (86) - (69)
Share of interest payable of
consolidated subsidiaries....... (21) -- 21 --
---- ------ --- ------
Loss on ordinary activities
before taxation................. (57) (61) 71 (47)
Taxation on loss on ordinary
activities...................... (3) (12) - (15)
Share of taxation of consolidated
subsidiaries.................... 16 -- (16) --
---- ------ --- ------
Loss on ordinary activities after
taxation (44) (73) 55 (62)
Attributable to minorities....... - (1) - (1)
---- ------ --- ------
Loss for the financial year...... (44) (74) 55 (63)
==== ====== === ======

F-66

Supplemental Combined Profit and Loss Account
For the year ended 31 December 1998

Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m

Turnover......................... 137 1,925 (51) 2,011
Operating costs.................. (125) (1,814) 51 (1,888)
Other operating income........... - 8 - 8
---- ------ --- ------
Trading profit before operating
exceptional items............... 12 119 - 131
Operating exceptional items...... - (10) - (10)
---- ------ --- ------
Trading profit after operating
exceptional items............... 12 109 - 121
Income from fixed asset
investment--dividends........... - 1 - 1
Exceptional items--losses on sale
or closure of operations........ - (4) - (4)
Share of profit of consolidated
subsidiaries before interest.... 32 - (32) -
---- ------ --- ------
Profit on ordinary activities
before interest................. 44 106 (32) 118
Net interest
receivable/(payable)............ 11 (82) - (71)
Share of interest payable of
consolidated subsidiaries....... (16) - 16 -
---- ------ --- ------
Profit on ordinary activities
before taxation................. 39 24 (16) 47
Taxation on profit on ordinary
activities...................... (9) 21 - 12
Share of taxation of consolidated
subsidiaries.................... 7 - (7) -
---- ------ --- ------
Profit on ordinary activities
after taxation 37 45 (23) 59
Attributable to minorities....... - (1) - (1)
---- ------ --- ------
Net profit for the financial
year............................ 37 44 (23) 58
==== ====== === ======

F-67

Supplemental Combined Balance Sheet
As at 31 December 1997

Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m

Fixed assets
Tangible assets.................. - 958 - 958
Investments--Participating and
other interests................. 141 7 (141) 7
--- ----- ---- -----
141 965 (141) 965
Current assets
Stocks........................... 12 224 - 236
Debtors.......................... 189 366 (215) 340
Investments and short-term
deposits--unlisted.............. - 2 - 2
Cash at bank..................... - 53 - 53
--- ----- ---- -----
201 645 (215) 631
--- ----- ---- -----
Total assets..................... 342 1,610 (356) 1,596
--- ----- ---- -----
Creditors due within one year
Short-term borrowings............ - (20) - (20)
Current instalments of loans..... - (9) - (9)
Other creditors.................. (51) (572) 215 (408)
--- ----- ---- -----
(51) (601) 215 (437)
--- ----- ---- -----
Net current assets............... 150 44 - 194
--- ----- ---- -----
Total assets less current
liabilities..................... 291 1,009 (141) 1,159
--- ----- ---- -----
Creditors due after more than one
year
Loans............................ - (10) - (10)
Financing due to ICI............. - (866) - (866)
Other creditors.................. - (7) - (7)
--- ----- ---- -----
- (883) - (883)
Provisions for liabilities and
charges......................... - (77) - (77)
Deferred income.................. - (11) - (11)
--- ----- ---- -----
- (971) - (971)
--- ----- ---- -----
Net assets....................... 291 38 (141) 188
=== ===== ==== =====
Net Investment................... 291 34 (141) 184
Minority Interests--equity....... - 4 - 4
--- ----- ---- -----
291 38 (141) 188
=== ===== ==== =====

F-68

Supplemental Combined Balance Sheet
As at 31 December 1998

Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m

Fixed assets
Tangible assets.................. - 1,041 - 1,041
Investments--Participating and
other interests................. 239 6 (239) 6
--- ------ ---- ------
239 1,047 (239) 1,047
Current assets
Stocks........................... 13 237 - 250
Debtors.......................... 141 328 (173) 296
Investments and short-term
deposits--unlisted.............. - 2 - 2
Cash at bank..................... - 51 - 51
--- ------ ---- ------
154 618 (173) 599
--- ------ ---- ------
Total assets..................... 393 1,665 (412) 1,646
--- ------ ---- ------
Creditors due within one year
Short-term borrowings............ - (12) - (12)
Current instalments of loans..... - (4) - (4)
Financing due to ICI ............ - (866) - (866)
Other creditors.................. (60) (458) 173 (345)
--- ------ ---- ------
(60) (1,340) 173 (1,227)
--- ------ ---- ------
Net current
assets/(liabilities)............ 94 (722) - (628)
--- ------ ---- ------
Total assets less current
liabilities..................... 333 325 (239) 419
--- ------ ---- ------
Creditors due after more than one
year
Loans............................ - (8) - (8)
Other creditors.................. - (9) - (9)
--- ------ ---- ------
- (17) - (17)
Provisions for liabilities and
charges......................... - (72) - (72)
Deferred income.................. - (11) - (11)
--- ------ ---- ------
- (100) - (100)
--- ------ ---- ------
Net assets....................... 333 225 (239) 319
=== ====== ==== ======
Net investment................... 333 222 (239) 316
Minority interests--equity ...... - 3 - 3
--- ------ ---- ------
333 225 (239) 319
=== ====== ==== ======

F-69

Supplemental Combined Cash Flow Statements
For the year ended 31 December 1996

Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m

Net cash inflow from operating
activities...................... 6 286 - 292
Equity income of wholly owned
subsidiaries.................... 45 - (45) -
Returns on investments and
servicing of finance............ 12 (25) - (13)
Taxation......................... 8 (49) - (41)
--- ---- --- ----
71 212 (45) 238
Capital expenditure and financial
investment...................... - (187) - (187)
Disposals........................ (13) - 13 -
--- ---- --- ----
Cashflow before financing........ 58 25 (32) 51
Net movement in financing........ (56) (33) 32 (57)
--- ---- --- ----
Increase/(decrease) in cash...... 2 (8) - (6)
=== ==== === ====
For the year ended 31 December 1997

Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m

Net cash inflow from operating
activities...................... (6) 117 - 111
Equity income of wholly owned
subsidiaries.................... 4 - (4) -
Returns on investments and
servicing of finance............ 16 (28) - (12)
Taxation......................... (9) (13) - (22)
--- ---- --- ----
5 76 (4) 77
Capital expenditure and financial
investment...................... - (169) - (169)
Acquisitions/(Disposals)......... (13) 31 13 31
--- ---- --- ----
Cashflow before financing........ (8) (62) 9 (61)
Net movement in financing........ 6 70 (9) 67
--- ---- --- ----
Increase/(decrease) in cash...... (2) 8 - 6
=== ==== === ====
For the year ended 31 December 1998

Non-
Guarantors Guarantors Eliminations Combined
---------- ---------- ------------ ---------
(Pounds)m (Pounds)m (Pounds)m (Pounds)m

Net cash inflow from operating
activities...................... 9 191 - 200
Equity income of wholly owned
subsidiaries.................... 1 - (1) -
Returns on investments and
servicing of finance............ 9 (21) - (12)
Taxation......................... (10) (46) - (56)
--- ---- --- ----
9 124 (1) 132
Capital expenditure and financial
investment...................... - (130) - (130)
Disposals........................ (70) - 70 -
--- ---- --- ----
Cashflow before financing........ (61) (6) 69 2
Net movement in financing........ 61 4 (69) (4)
--- ---- --- ----
Decrease in cash................. - (2) - (2)
=== ==== === ====

F-70

UNAUDITED CONDENSED COMBINED PROFIT AND LOSS ACCOUNTS

3 months ended
31 March
-------------------
1998 1999
--------- ---------
(Unaudited)
(Pounds)m (Pounds)m

Turnover.............................................. 532 482
Operating costs....................................... (494) (455)
---- ----
Trading profit........................................ 38 27
Exceptional items - loss on sale or closure of
operations........................................... (4) --
---- ----
Profit on ordinary activities before interest......... 34 27
Net interest payable.................................. (20) (16)
---- ----
Profit on ordinary activities before taxation......... 14 11
Taxation on profit on ordinary activities............. -- (4)
---- ----
Profit on ordinary activities after taxation ......... 14 7
Attributable to minorities............................ -- --
---- ----
Net profit for the financial year..................... 14 7
---- ----

The accompanying notes form an integral part of these condensed combined
financial statements.

F-71

UNAUDITED CONDENSED COMBINED BALANCE SHEETS

At
31 December At
1998 31 March 1999
----------- -------------
(Unaudited)
(Pounds)m (Pounds)m

Fixed assets
Tangible assets.................................... 1,041 1,051
Investments--Participating and other interests .... 6 6
------ ------
1,047 1,057
------ ------
Current assets
Stocks............................................. 250 256
Debtors............................................ 296 308
Investments and short-term deposits--unlisted...... 2 3
Cash at bank....................................... 51 32
------ ------
599 599
------ ------
Total assets....................................... 1,646 1,656
------ ------
Creditors due within one year
Short-term borrowings.............................. (12) (8)
Current instalments of loans....................... (4) (5)
Financing due to ICI............................... (866) (866)
Other creditors.................................... (345) (326)
------ ------
(1,227) (1,205)
------ ------
Net current liabilities ........................... (628) (606)
------ ------
Total assets less current liabilities.............. 419 451
------ ------
Creditors due after more than one year
Loans.............................................. (8) (7)
Other creditors.................................... (9) (9)
------ ------
(17) (16)
Provisions for liabilities and charges............. (72) (75)
Deferred income.................................... (11) (10)
------ ------
(100) (101)
------ ------
------ ------
Net assets......................................... 319 350
====== ======
Net investment..................................... 316 347
Minority interest - equity ........................ 3 3
------ ------
319 350
====== ======

The accompanying notes form an integral part of these condensed combined
financial statements.

F-72

UNAUDITED CONDENSED COMBINED CASH FLOW STATEMENTS

3 months ended 31
March
-------------------
1998 1999
--------- ---------
(Unaudited)
(Pounds)m (Pounds)m

Net cash inflow/(outflow) from operating activities......... (12) 1
Returns on investments and servicing of finance............. (4) (3)
Taxation.................................................... (9) (2)
--- ---
(25) (4)
Capital expenditures and financial investment............... (22) (35)
--- ---
Cash flow before financing.................................. (47) (39)
Net movement in financing................................... 38 26
--- ---
Decrease in cash............................................ (9) (13)
=== ===

The accompanying notes form an integral part of these condensed combined
financial statements.

F-73

NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS

1 Basis of Preparation

These Unaudited Condensed Combined Financial Statements have been prepared
applying the basis of preparation and accounting policies disclosed in
Notes 1 and 2 to the Combined Financial Statements and should be read in
conjunction with those Combined Financial Statements included at pages F-
35 to F-66. In the opinion of management of ICI, the Unaudited Condensed
Combined Financial Statements includes all adjustments, consisting only of
normal recurring adjustments other than those separately disclosed,
necessary for a fair statement of the results for the interim periods.
Financial information for interim periods is not necessarily indicative of
the results for the full year.

2 Inventories

31 December, 31 March,
1998 1999
------------ -----------
(Unaudited)
(Pounds)m (Pounds)m

Raw materials and consumables........................ 106 100
Stocks in process.................................... 11 10
Finished goods and goods for resale.................. 133 146
--- ---
250 256
=== ===

F-74

3 Differences between UK and US accounting principles

These Unaudited Condensed Combined Financial Statements have been prepared
in accordance with United Kingdom Generally Accepted Accounting Principles (UK
GAAP) which differs in certain significant respects from US GAAP. A description
of the relevant accounting principles which differ materially is given in Note
30 to the Combined Financial Statements.

The following is a summary of the material adjustments to net income and
net assets which would be required if US GAAP had been applied instead of UK
GAAP:

3 months ended
31 March
-------------------
1998 1999
--------- ---------
(Unaudited)
(Pounds)m (Pounds)m

Net income - UK GAAP....................................... 14 7
Adjustments to conform with US GAAP:
Pension expense.......................................... - (1)
Purchase accounting adjustments:
Amortisation of goodwill and intangibles............... - -
Capitalisation of interest less amortisation and
disposals............................................... (1) (2)
Restructuring costs...................................... - -
Deferred taxation........................................
Arising on UK GAAP results............................. 2 1
Arising on other US GAAP adjustments................... - 1
--- ---
Total US GAAP adjustments................................ 1 (1)
--- ---
Net income - US GAAP....................................... 15 6
=== ===

At 31 March
1999
-----------
(Unaudited)
(Pounds)m

Net assets - UK GAAP............................................... 350
Adjustments to conform with US GAAP:
Purchase accounting adjustments including goodwill and
intangibles..................................................... 30
Capitalisation of interest less amortisation and disposals....... 69
Restructuring provisions......................................... 5
Pension expense.................................................. (28)
Deferred taxation................................................ (68)
---
Total US GAAP adjustments........................................ 8
---
Net assets - US GAAP............................................... 358
===

F-75

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus
does not offer to sell or ask for offers to buy any securities other than those
to which this prospectus relates and it does not constitute an offer to sell or
ask for offers to buy any of the securities in any jurisdiction where it is
unlawful, where the person making the offer is not qualified to do so, or to
any person who cannot legally be offered the securities. The information
contained in this prospectus is current only as of its date.

Until , 1999, all dealers that effect transactions in these
securities, whether or not participating in this exchange offer, may be
required to deliver a prospectus.

---------------
PROSPECTUS
---------------

Huntsman ICI Chemicals LLC

Exchange Offer for

$600,000,000 10 1/8% Senior Subordinated Notes due 2009

(Euro)200,000,000 10 1/8% Senior Subordinated Notes due 2009

---------------

[LOGO OF HUNTSMAN APPEARS HERE]

[LOGO OF ICI APPEARS HERE]

---------------

, 1999

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PART II

Item 20. Indemnification of Officers and Directors

Huntsman ICI Chemicals LLC is empowered by Section 18-108 of the Delaware
Limited Liability Company Act, subject to the procedures and limitations
therein, to indemnify and hold harmless any member or manager or other person
from and against any and all claims and demands whatsoever, subject to such
standards and restrictions, if any, as are set forth in its limited liability
company agreement. Huntsman ICI Chemicals LLC's amended and restated limited
liability company agreement contains no indemnification provisions.

Huntsman ICI Financial LLC is empowered by Section 18-108 of the Delaware
Limited Liability Company Act, subject to the procedures and limitations
therein, to indemnify and hold harmless any member or manager or other person
from and against any and all claims and demands whatsoever, subject to such
standards and restrictions, if any, as are set forth in its limited liability
company agreement. Huntsman ICI Financial LLC's limited liability company
agreement contains no indemnification provisions.

Tioxide Group is an unlimited company having share capital registered in
England and Wales. Section 310 of the U.K. Companies Act of 1985 (as amended)
nullifies any provision contained in a company's articles of association or in
any other contract with the company for exempting any director, officer or
auditor of the company, or indemnifying such person against, any liability that
would attach to him by rule of law in respect of any negligence, default,
breach of duty or breach of trust for which such person may be guilty with
respect to such company. However, Section 310 permits a company to purchase or
maintain insurance for its directors, officers and auditors against liabilities
of this nature and permits a company to indemnify any director, officer or
auditor against any liability incurred by such person that results from
defending any proceedings (civil or criminal) in which a judgment is given in
such person's favor or such person is acquitted or application is made under
Section 144(3) or (4) of the Companies Act (acquisition of shares by innocent
nominee) or Section 727 of the Companies Act (general power to grant relief in
the case of honest and reasonable conduct) where relief is granted to such
director, officer or auditor by the court.

Article 22(a) of the Articles of Association of Tioxide Group indemnifies
every director, officer and auditor of Tioxide Group out of the assets of
Tioxide Group against all losses and liabilities that such person may sustain
in the performance of the duties of his office to the extent permitted by
Section 310 of the Companies Act. Furthermore, Article 22(b) empowers the
directors of Tioxide Group to purchase insurance for any director, officer or
auditor of Tioxide Group as permitted by the Companies Act.

Tioxide Americas Inc. is incorporated in the Cayman Islands. Cayman Islands
law does not specifically limit the extent to which a company's articles of
association may provide for the indemnification of officers and directors,
except to the extent that such provision may be held by the Cayman Islands
courts to be contrary to public policy (e.g., for purporting to provide
indemnification against the consequences of committing a crime). In addition,
an officer or director may not be able to enforce indemnification for his own
dishonesty or wilful neglect or default.

Article 123 of the Articles of Association of Tioxide Americas Inc., which
is filed as an exhibit to this registration statement, contain provisions
providing for the indemnification by Tioxide Americas of an officer, director
or trustee of Tioxide Americas for all actions, proceedings, claims, costs,
charges,

II-1

losses, damages and expenses which they incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own respective wilful neglect or default.

Item 21. Exhibits and Financial Statement Schedules

3.1 Certificate of Formation of Huntsman ICI Chemicals LLC

3.2 Amended and Restated Limited Liability Company Agreement of Huntsman
ICI Chemicals LLC dated June 30, 1999

3.3 Certificate of Formation of Huntsman ICI Financial LLC

3.4 Limited Liability Company Agreement of Huntsman ICI Financial LLC dated
June 18, 1999, as amended by the First Amendment dated June 19, 1999

3.5 Memorandum of Association of Tioxide Group*

3.6 Articles of Association of Tioxide Group*

3.7 Memorandum of Association of Tioxide Americas Inc.

3.8 Articles of Association of Tioxide Americas Inc.

4.1 Indenture, dated as of June 30, 1999, among Huntsman ICI Chemicals LLC,
the Guarantors party thereto and Bank One, N.A., as Trustee, relating
to the 10 1/8% Senior Subordinated Notes due 2009

4.2 Form of certificate of 10 1/8% Senior Subordinated Note due 2009
denominated in dollars (included as Exhibit A-3 to Exhibit 4.1)

4.3 Form of certificate of 10 1/8% Senior Subordinated Note due 2009
denominated in euros (included as Exhibit A-4 to Exhibit 4.1)

4.4 Exchange and Registration Rights Agreement dated June 30, 1999, by and
among Huntsman ICI Chemicals LLC, the Guarantors party thereto,
Goldman, Sachs & Co., Deutsche Bank Securities Inc., Chase Securities
Inc. and Warburg Dillon Read LLC

4.5 Form of Guarantee (included as Exhibit E to Exhibit 4.1)

5.1 Form of opinion and consent of Skadden, Arps, Slate, Meagher & Flom as
to the legality of the notes to be issued by Huntsman ICI Chemicals
LLC, and the guarantees to be issued by Huntsman ICI Financial LLC, in
the exchange offer*

5.2 Form of opinion and consent of Counsel to Tioxide Group as to the
legality of the guarantees to be issued by Tioxide Group in the
exchange offer*

5.3 Form of opinion and consent of W.S. Walker & Company as to the legality
of the guarantees to be issued by Tioxide Americas Inc. in the exchange
offer*

8.1 Opinion and consent of Skadden, Arps, Slate, Meagher & Flom LLP as to
the tax consequences of the notes to be issued by Huntsman ICI Chemical
LLC*

10.1 Contribution Agreement, dated as of April 15, 1999, by and among
Imperial Chemical Industries PLC, Huntsman Specialty Chemicals
Corporation, Huntsman ICI Holdings LLC and Huntsman ICI Chemicals LLC
as amended by the first Amending Agreement, dated June 4, 1999, the
second Amending Agreement, dated June 30, 1999, and the third Amending
Agreement, dated June 30, 1999

10.2 Purchase and Sale Agreement (PO/MTBE Business), dated March 21, 1997,
among Texaco, Texaco Chemical Inc. and Huntsman Specialty Chemicals
Corporation

10.3 Operating and Maintenance Agreement, dated as of March 21, 1997, by and
between Huntsman Specialty Chemicals Corporation and Huntsman
Petrochemical Corporation

II-2

10.4 Credit Agreement, dated as of June 30, 1999, by and among Huntsman ICI
Chemicals LLC, Huntsman ICI Holdings LLC, Bankers Trust Company,
Goldman Sachs Credit Partners LP, The Chase Manhattan Bank, and Warburg
Dillon Read and various lending institutions party thereto

10.5 Asset Sale Agreement, dated June 30, 1999, by and between BP Chemicals
Limited and Huntsman ICI Chemicals LLC+

10.6 Joint Venture Agreement, dated as of October 18, 1993 between Tioxide
Americas Inc. and Kronos Louisiana, Inc.

10.7 Shareholders Agreement, dated as of January 11, 1982, by and among
Imperial Chemical Industries PLC, ICI American Holdings, Inc. and
Uniroyal, Inc.

10.8 Operating Agreement, dated December 28, 1981, between Uniroyal, Inc.,
Rubicon Chemicals, Inc. and Rubicon, Inc.

10.9 Liability and Indemnity Agreement, dated December 28, 1981, by and
among Rubicon Inc., Rubicon Chemicals Inc., Imperial Chemical
Industries PLC, ICI American Holdings Inc., ICI Americas Inc. and
Uniroyal Inc.*

12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges

21.1 Subsidiaries of Huntsman ICI Chemicals LLC

23.1 Consent of Deloitte & Touche LLP

23.2 Consent of Arthur Andersen LLP

23.3 Consent of KPMG Audit Plc

23.4 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.1)*

24.1 Powers of Attorney (included as part of signature page)

25.1 Form T-1 Statement of Eligibility of Bank One, N.A. to act as Trustee
under the indenture

27.1 Financial Data Schedule (for SEC use only)

99.1 Form of Letter of Transmittal for dollar denominated notes

99.2 Form of Notice of Guaranteed Delivery for dollar denominated notes

99.3 Form of Letter of Transmittal for euro denominated notes

99.4 Form of Notice of Guaranteed Delivery for euro denominated notes

99.5 Letter to Brokers

99.6 Letter to Clients

- --------
* To be filed by amendment.
+ Confidential treatment requested. Exhibit omitted and filed separately with
the SEC.

II-3

Item 22. Undertakings

The Undersigned registrants hereby undertake:

(1) To file during any period in which offers to sale are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities would
not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;

(iii) to include any material information with respect to the plan of
distribution previously disclosed in the registration statement or any
material change to such information in the registration statement.

(2) That, for the purpose of determining any liabilities under the
Securities Act of 1933, each post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from the registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.

The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of the receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.

The undersigned registrant hereby undertakes to supply by means of post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 20 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act, Huntsman ICI Chemicals
LLC has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the city of Salt Lake City,
State of Utah, on the 13th day of August, 1999.

Huntsman ICI Chemicals LLC

/s/ Jon M. Huntsman
By: _________________________________
Jon M. Huntsman
Chief Executive Officer, Chairman
of the
Board of Managers & Manager

POWER OF ATTORNEY

We the undersigned managers and officers of Huntsman ICI Chemicals LLC do
hereby constitute and appoint Jon M. Huntsman, Jon M. Huntsman, Jr., J. Kimo
Esplin, Robert B. Lence and Martin F. Petersen and each of them, our true and
lawful attorneys-in-fact and agents, to do any and all acts and things in our
names and on our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable said company to comply with the Securities Act
of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this registration
statement, or any registration statement for this offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933,
including specifically, but without limitation, the power and authority to sign
for us or any of us in our names in the capacities indicated below, any and all
amendments (including post-effective amendments) hereto; and we do hereby
ratify and confirm all that said attorneys and agents, or any of them, shall do
or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities on the 13th day of August, 1999:

Name Capacities
---- ----------

/s/ Jon M. Huntsman Chief Executive Officer, Chairman of the
______________________________________ Board of Managers & Manager
Jon M. Huntsman

/s/ Jon M. Huntsman, Jr. Vice Chairman of the Board of Managers and
______________________________________ Manager
Jon M. Huntsman, Jr.

/s/ Peter R. Huntsman President, Chief Operating Officer and
______________________________________ Manager
Peter R. Huntsman

/s/ J. Kimo Esplin Chief Financial Officer
______________________________________
J. Kimo Esplin

II-5

HUNTSMAN ICI FINANCIAL LLC

Pursuant to the requirements of the Securities Act, Huntsman ICI Financial
LLC has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the city of Salt Lake City,
State of Utah, on the 13th day of August, 1999.

Huntsman ICI Financial LLC

/s/ Jon M. Huntsman
By: _________________________________
Jon M. Huntsman
Chief Executive Officer, Chairman
of the
Board of Managers & Manager

POWER OF ATTORNEY

We the undersigned managers and officers of Huntsman ICI Financial LLC do
hereby constitute and appoint Jon M. Huntsman, Jon M. Huntsman, Jr., J. Kimo
Esplin, Robert B. Lence and Martin F. Petersen and each of them, our true and
lawful attorneys-in-fact and agents, to do any and all acts and things in our
names and on our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable said company to comply with the Securities Act
of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this registration
statement, or any registration statement for this offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933,
including specifically, but without limitation, the power and authority to sign
for us or any of us in our names in the capacities indicated below, any and all
amendments (including post-effective amendments) hereto; and we do hereby
ratify and confirm all that said attorneys and agents, or any of them, shall do
or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities on the 13th day of August, 1999:

Name Capacities
---- ----------

/s/ Jon M. Huntsman Chief Executive Officer, Chairman of the
______________________________________ Board of Managers & Manager
Jon M. Huntsman

/s/ Jon M. Huntsman, Jr. Vice Chairman of the Board of Managers and
______________________________________ Manager
Jon M. Huntsman, Jr.

/s/ Peter R. Huntsman President, Chief Operating Officer and
______________________________________ Manager
Peter R. Huntsman

/s/ J. Kimo Esplin Chief Financial Officer
______________________________________
J. Kimo Esplin

II-6

TIOXIDE GROUP

Pursuant to the requirements of the Securities Act, Tioxide Group has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Salt Lake City, State of
Utah, on the 13th day of August, 1999.

Tioxide Group

/s/ Peter R. Huntsman
By: _________________________________
Peter R. Huntsman
Chairman of the Board of
Directors

POWER OF ATTORNEY

We the undersigned directors and officers of Tioxide Group do hereby
constitute and appoint Jon M. Huntsman, Jon M. Huntsman, Jr., J. Kimo Esplin,
Robert B. Lence and Martin F. Petersen and each of them, our true and lawful
attorneys-in-fact and agents, to do any and all acts and things in our names
and on our behalf in our capacities as directors and officers and to execute
any and all instruments for us and in our name in the capacities indicated
below, which said attorneys and agents, or either of them, may deem necessary
or advisable to enable said company to comply with the Securities Act of 1933,
as amended, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this registration statement, or any
registration statement for this offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, including
specifically, but without limitation, the power and authority to sign for us or
any of us in our names in the capacities indicated below, any and all
amendments (including post-effective amendments) hereto; and we do hereby
ratify and confirm all that said attorneys and agents, or any of them, shall do
or cause to be done by virtue thereof.

Pursuant to the requirements of Securities Act of 1933, this registration
statement has been signed by the following persons on the 13th day of August,
1999:

Name Capacities
---- ----------

/s/ Peter R. Huntsman Chairman of the Board of Directors
______________________________________
Peter R. Huntsman

/s/ J. Kimo Esplin Director
______________________________________
J. Kimo Esplin

/s/ L. Russell Healy Director
______________________________________
L. Russell Healy

II-7

TIOXIDE AMERICAS INC.

Pursuant to the requirements of the Securities Act, Tioxide Americas Inc.
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Salt Lake City, State of
Utah, on the 13th day of August, 1999.

Tioxide Americas Inc.

/s/ Peter R. Huntsman
By: _________________________________
Peter R. Huntsman
Chairman of the Board of
Directors

POWER OF ATTORNEY

We the undersigned directors and officers of Tioxide Americas Inc. do
hereby constitute and appoint Jon M. Huntsman, Jon M. Huntsman, Jr., J. Kimo
Esplin, Robert B. Lence and Martin F. Petersen and each of them, our true and
lawful attorneys-in-fact and agents, to do any and all acts and things in our
names and on our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the capacities
indicated below, which said attorneys and agents, or either of them, may deem
necessary or advisable to enable said company to comply with the Securities Act
of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this registration
statement, or any registration statement for this offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933,
including specifically, but without limitation, the power and authority to sign
for us or any of us in our names in the capacities indicated below, any and all
amendments (including post-effective amendments) hereto; and we do hereby
ratify and confirm all that said attorneys and agents, or any of them, shall do
or cause to be done by virtue thereof.

Pursuant to the requirements of Securities Act of 1933, this registration
statement has been signed by the following persons on the 13th day of August,
1999:

Name Capacities
---- ----------

/s/ Peter R. Huntsman Chairman of the Board of Directors
______________________________________
Peter R. Huntsman

/s/ J. Kimo Esplin Director
______________________________________
J. Kimo Esplin

/s/ L. Russell Healy Director and Treasurer
______________________________________
L. Russell Healy

II-8

EXHIBIT INDEX

Number Description of Exhibits
------ -----------------------

3.1 Certificate of Formation of Huntsman ICI Chemicals LLC

3.2 Amended and Restated Limited Liability Company Agreement of Huntsman
ICI Chemicals LLC dated June 30, 1999

3.3 Certificate of Formation of Huntsman ICI Financial LLC

3.4 Limited Liability Company Agreement of Huntsman ICI Financial LLC dated
June 18, 1999, as amended by the First Amendment dated June 19, 1999

3.5 Memorandum of Association of Tioxide Group*

3.6 Articles of Association of Tioxide Group*

3.7 Memorandum of Association of Tioxide Americas Inc.

3.8 Articles of Association of Tioxide Americas Inc.

4.1 Indenture, dated as of June 30, 1999, among Huntsman ICI Chemicals LLC,
the Guarantors party thereto and Bank One, N.A., as Trustee, relating
to the 10 1/8% Senior Subordinated Notes due 2009

4.2 Form of certificate of 10 1/8% Senior Subordinated Note due 2009
denominated in dollars (included as Exhibit A-3 to Exhibit 4.1)

4.3 Form of certificate of 10 1/8% Senior Subordinated Note due 2009
denominated in euros (included as Exhibit A-4 to Exhibit 4.1)

4.5 Form of Guarantee (included as Exhibit E of Exhibit 4.1)