LYONDELLBASELL
US bankruptcy court grants emergency financing / European converters are concerned about bonuses
Lyondell Chemical, US arm of insolvent LyondellBasell (Rotterdam / The Netherlands; www.lyondellbasell.com), received an emergency credit line of USD 100m on 8 January from investment bank Citibank. This was to be followed shortly by the first USD 2.17 bn tranche of a pledged USD 8 bn in debtor-in-possession (DIP) funding. The world’s third largest petrochemicals producer filed for Chapter 11 protection from creditors in the US on 6 January – see Plasteurope.com of 07.01.2009.
At a loan hearing in New York, LyondellBasell’s chief financial officer, Alan Bigman, underlined the company’s dramatic position. Without the emergency capital injection, he said it would be forced to liquidate within two weeks while waiting for court approval of what US press reports call the biggest DIP financing package in the country’s history.
According to court documents, 14 lenders are contributing to the package. They include investment bank UBS with a reported USD 770m, private equity groups Apollo (USD 710m) and Cerberus (USD 237.5m) and ABN Amro Holding. Apollo, which recently agreed to pay Huntsman (Salt Lake City / Utah; www.huntsman.com) USD 1 bn to terminate the planned acquisition of the US chemical group by its chemicals subsidiary Hexion – see Plasteurope.com of 16.12.2008 – is said to hold LyondellBasell notes worth USD 2.2 bn.
Reports say LyondellBasell owner Access Industries was excluded from the rescue plan, as the other lenders feared the New York investment company owned by Russian-born billionaire Len Blavatnik might obtain more favourable conditions. Blavatnik told the “Financial Times” that the bankruptcy was “a shame for those who lost money,” adding that “in today’s world, you don’t want to have too much debt.” At the same time, he defended the highly leveraged 2007 merger of Lyondell and Basell.
Lawyers for the bankrupt company said it will use the first flow of dollars to pay for goods and services ordered before the Chapter 11 filing, as well as USD 8.1m in outstanding wages owed US employees. Although the insolvency affects only North America, judge Robert Gerber authorised payment of USD 350m to foreign creditors, saying that these could cut off raw material supplies, seize assets or in foreign courts.
Altogether, LyondellBasell is thought to owe USD 26 bn, nearly two-thirds of this in the US. One of its smaller creditors is BASF Corporation (Florham Park, New Jersey / USA; www.basf.com), US subsidiary of the BASF group (Ludwigshafen / Germany; www.basf.com). It was awarded USD 206m in a 2007 judgment against Lyondell for breach of a propylene oxide supply contract, but has not been paid.
In Europe, management has taken pains to stress that suppliers and customers have nothing to fear. In a statement, it explained that the holding LyondellBasell Germany was included in the insolvency proceedings only to allow it to benefit from the special financing package. Plastics converters nevertheless are concerned about whether they will receive their accustomed year-end rebates for large-volume orders. One already has submitted an invoice.
At a loan hearing in New York, LyondellBasell’s chief financial officer, Alan Bigman, underlined the company’s dramatic position. Without the emergency capital injection, he said it would be forced to liquidate within two weeks while waiting for court approval of what US press reports call the biggest DIP financing package in the country’s history.
According to court documents, 14 lenders are contributing to the package. They include investment bank UBS with a reported USD 770m, private equity groups Apollo (USD 710m) and Cerberus (USD 237.5m) and ABN Amro Holding. Apollo, which recently agreed to pay Huntsman (Salt Lake City / Utah; www.huntsman.com) USD 1 bn to terminate the planned acquisition of the US chemical group by its chemicals subsidiary Hexion – see Plasteurope.com of 16.12.2008 – is said to hold LyondellBasell notes worth USD 2.2 bn.
Reports say LyondellBasell owner Access Industries was excluded from the rescue plan, as the other lenders feared the New York investment company owned by Russian-born billionaire Len Blavatnik might obtain more favourable conditions. Blavatnik told the “Financial Times” that the bankruptcy was “a shame for those who lost money,” adding that “in today’s world, you don’t want to have too much debt.” At the same time, he defended the highly leveraged 2007 merger of Lyondell and Basell.
Lawyers for the bankrupt company said it will use the first flow of dollars to pay for goods and services ordered before the Chapter 11 filing, as well as USD 8.1m in outstanding wages owed US employees. Although the insolvency affects only North America, judge Robert Gerber authorised payment of USD 350m to foreign creditors, saying that these could cut off raw material supplies, seize assets or in foreign courts.
Altogether, LyondellBasell is thought to owe USD 26 bn, nearly two-thirds of this in the US. One of its smaller creditors is BASF Corporation (Florham Park, New Jersey / USA; www.basf.com), US subsidiary of the BASF group (Ludwigshafen / Germany; www.basf.com). It was awarded USD 206m in a 2007 judgment against Lyondell for breach of a propylene oxide supply contract, but has not been paid.
In Europe, management has taken pains to stress that suppliers and customers have nothing to fear. In a statement, it explained that the holding LyondellBasell Germany was included in the insolvency proceedings only to allow it to benefit from the special financing package. Plastics converters nevertheless are concerned about whether they will receive their accustomed year-end rebates for large-volume orders. One already has submitted an invoice.
12.01.2009 Plasteurope.com [212587]
Published on 12.01.2009
German version of this article...