INEOS says it has adequate liquidity

03 November 2008 18:40  [Source: ICIS news]

LONDON (ICIS news)--INEOS has adequate liquidity and is prioritising cash generation and reviewing its non-essential capital expenditure programme, the UK headquartered chemicals major said on Monday.

Speculation had mounted that the privately-held group faced an uphill battle in the teeth of a credit crunch and the industry downturn and could face its own credit crisis.

In response to media speculation, the $41bn (€32bn) turnover group issued a statement saying that that it had never breached any of its banking covenants.

“The company has significantly reduced its borrowings over the last three years and has no significant debt maturing in the short term,” the statement posted on the INEOS website said.

Since acquiring the BP Innovene olefins and derivatives business in 2005, INEOS said it had reduced its debt by more than €1bn. Cash balances on 30 September 2008 were €1.4bn, it added.

“The company also operates all its businesses to be profitable at the bottom of the chemicals cycle,” the statement continued. “INEOS has significantly improved the cost base and efficiency of al its businesses to enable it to compete effectively in global markets.

Speculation has mounted in the UK press that the group, controlled by Jim Ratcliffe, one of Britain’s richest men, could be forced by the credit crunch to sell assets in the US to reduce its debt burden.

Prices for many of the company's products have plunged in recent weeks.

A report in The Times on 31 October suggested that the credit crunch was eating away at the chemical empires built by two secretive tycoons, Ratcliffe, and Len Blavatnik, the New York based financier whose Access Industries controls Lyondell Basell.

In the debt trading markets, the value of INEOS loans had crumpled to almost half their face value, reflecting investor perception of a heightened default risk, the Times article said.

LyondellBasell said on Friday that its Equistar business had temporarily shuttered olefins capacity La Porte, Texas, due to declining market and economic conditions.

($1 = €0.78)

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By: Nigel Davis
+44 20 8652 3214

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