LYONDELLBASELL
Chapter 11 filing in New York / Finance holding Basell Germany involved, other non-US business unaffected
As many observers expected, LyondellBasell (Rotterdam / The Netherlands; www.lyondellbasell.com) filed for Chapter 11 protection from creditors on 6 January 2009 with the US bankruptcy court in the Southern District of New York / USA – see Plasteurope.com of 06.01.2009. The filing involves mainly US operations, but also the Basell Germany finance holding. All non-US operating companies will continue to function independently of the Chapter 11 process, LyondellBasell said.
The Netherlands-based company has asked the court to approve up to USD 8 bn in debtor-in-possession (DIP) financing pledged by lenders to keep the business afloat during the reorganisation period. Of the total, USD 3.25 bn consists of fresh funding, while the same sum is earmarked for refinancing of existing senior secured funding. An additional USD 1.5 bn has been allotted for replacement of existing working capital facilities. Owner Access Industries (New York / USA) is said to have agreed to contribute USD 750m in financing for the attempted turnaround.
Explaining the reasons for the filing, CEO Volker Trautz said LyondellBasell has seen “a dramatic softening in demand for our products and unprecedented volatility in raw materials costs” over the past two quarters. “December was particularly difficult, as many of our customers postponed orders to reduce their inventories,” he added. During the reorganisation period, which Trautz said should be short-term, as he expects customers to begin ordering again in 2009, the company intends to “continue its operations and its relationships with customers and suppliers in the normal course.”
Prior to the Chapter 11 financing, the company had been consulting with its lender banks to renegotiate its debts, which ratings agency Standard & Poor’s estimated at USD 26 bn. The most pressing financial problems are said to involve the US (formerly Lyondell) side of the business, with lenders including investment banks Merrill Lynch (recently rescued from impending insolvency by Bank of America) and the equally hard-pressed Goldman Sachs and Citigroup, along with UBS Securities in the US.
One of LyondellBasell’s biggest creditors is identified in news reports as the Bank of New York. It also owes industrial companies such as Venezuelan oil giant Petroleos de Venezuela, Algerian gas major Sonatrach, ExxonMobil and Dow Chemical. Additionally, it has debts for goods and services with BASF (to which some of the company’s plastics business once belonged) as well as industrial gases suppliers Linde, Air Products and Air Liquide.
No information has been provided about the effects of the bankruptcy on employment. In late November, LyondellBasell said it planned to cut some 2,500 of 17,000 jobs, around 15% of the workforce, while closing plants and reducing capacity (see Plasteurope.com of 24.11.2008). US unions are said to be poised for action, if necessary.
The company in its present form was created in 2007 through the highly leveraged USD 12.7 bn buyout of US chemical producer Lyondell by Basell’s owner Access. The two businesses were merged to create one of the world’s largest petrochemicals players and the leading producer of polypropylene, then with pro forma annual sales of USD 45 bn – see Plasteurope.com of 16.05.2007 and 19.05.2008.
The Netherlands-based company has asked the court to approve up to USD 8 bn in debtor-in-possession (DIP) financing pledged by lenders to keep the business afloat during the reorganisation period. Of the total, USD 3.25 bn consists of fresh funding, while the same sum is earmarked for refinancing of existing senior secured funding. An additional USD 1.5 bn has been allotted for replacement of existing working capital facilities. Owner Access Industries (New York / USA) is said to have agreed to contribute USD 750m in financing for the attempted turnaround.
Explaining the reasons for the filing, CEO Volker Trautz said LyondellBasell has seen “a dramatic softening in demand for our products and unprecedented volatility in raw materials costs” over the past two quarters. “December was particularly difficult, as many of our customers postponed orders to reduce their inventories,” he added. During the reorganisation period, which Trautz said should be short-term, as he expects customers to begin ordering again in 2009, the company intends to “continue its operations and its relationships with customers and suppliers in the normal course.”
Prior to the Chapter 11 financing, the company had been consulting with its lender banks to renegotiate its debts, which ratings agency Standard & Poor’s estimated at USD 26 bn. The most pressing financial problems are said to involve the US (formerly Lyondell) side of the business, with lenders including investment banks Merrill Lynch (recently rescued from impending insolvency by Bank of America) and the equally hard-pressed Goldman Sachs and Citigroup, along with UBS Securities in the US.
One of LyondellBasell’s biggest creditors is identified in news reports as the Bank of New York. It also owes industrial companies such as Venezuelan oil giant Petroleos de Venezuela, Algerian gas major Sonatrach, ExxonMobil and Dow Chemical. Additionally, it has debts for goods and services with BASF (to which some of the company’s plastics business once belonged) as well as industrial gases suppliers Linde, Air Products and Air Liquide.
No information has been provided about the effects of the bankruptcy on employment. In late November, LyondellBasell said it planned to cut some 2,500 of 17,000 jobs, around 15% of the workforce, while closing plants and reducing capacity (see Plasteurope.com of 24.11.2008). US unions are said to be poised for action, if necessary.
The company in its present form was created in 2007 through the highly leveraged USD 12.7 bn buyout of US chemical producer Lyondell by Basell’s owner Access. The two businesses were merged to create one of the world’s largest petrochemicals players and the leading producer of polypropylene, then with pro forma annual sales of USD 45 bn – see Plasteurope.com of 16.05.2007 and 19.05.2008.
07.01.2009 Plasteurope.com [212573]
Published on 07.01.2009
German version of this article...