Just three days after Canadian telecom company BCE (BCE) saw its deal to be taken private at $46.8 billion fall through after the deal failed to get a passing grade from two different accounting firms, Huntsman Corporation (HUN) agreed to end its pending $6.51 billion merger agreement with Hexion Specialty Chemicals, a division of private equity firm, Apollo Management.

In return, Hexion will receive a billion dollars in total, for breakup fees, as well as the settlement of legal claims which Huntsman had filed against Apollo, after Apollo tried to back out of the deal as the credit crisis picked up steam.

Apollo will pay Huntsman a $325 million dollar break-up fee, $425 million to settle the legal claims and affiliates of Apollo Management will also pay Huntsman $250 million and in return, will receive 10-year convertible notes.

The deal was first announced back in July 2007. However, a year later, the deteriorating global economy and a difficult operating environment for private equity firms, which no longer had easy access to credit, forced Apollo Management’s hand and they tried to scrap the deal.

Huntsman promptly took the firm to court. Apollo’s contention that the deal which would have been financed with one hundred percent borrowed money no longer met solvency tests was not a valid excuse as far as the Delaware Court of Chancery was concerned and it ruled that Hexion intentionally breached the merger agreement.

Huntsman had sued for $3 billion, so to a degree, it is some relief to Apollo, that the company is willing to settle for a billion, of which $250 million of that can’t really be considered an expense, since Apollo will be receiving the convertible notes.