31 December 2008 02:27 [Source: ICIS news]
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LyondellBasell subsidiary Lyondell Chemical said in a Monday filing with the US Securities and Exchange Commission (SEC) it has begun talks with lenders in order to extend payment dates and restructure its debt.
LyondellBasell has retained Evercore Partners and Aliz Partners to assist in the debt restructuring talks, according to the SEC filing.
Standard and Poor’s downgraded LyondellBasell’s credit rating to 'SD' (selective default) from 'B-', and the issue-rating level on the $8bn notes guaranteed by it to 'D' from 'CCC+' or 'CCC' depending on the instruments.
"Our downgrade follows the group's decision to postpone $280m of payments due under the bridge loan conversion," said Standard & Poor's credit analyst Tobias Mock.
While the deferral was made with the lenders' agreement, the obligation was not paid as originally scheduled, Standard and Poor’s said. “This is a default in our opinion, according to our definitions and criteria.
“Furthermore, the other corporate credit ratings were lowered to 'CC' because we believe this deferral is the first step of the distressed group's restructuring efforts, which are likely to involve additional material concessions by creditors and/or payment defaults.”
"In light of its complex multi-tiered debt structure, the group faces a rapidly weakening liquidity position, very high leverage with approximately $26bn of debt, and very challenging operating trends," Standard and Poor' said.LyondellBasell took issue with Standard and Poor’s assessment of default.
"Standard & Poor's definition of 'selected default' related to our corporate credit rating should not be misinterpreted to suggest that LyondellBasell is currently in default of its bank agreements,” LyondellBasell said. “LyondellBasell is not currently in default according to its agreements with its lenders."
Credit ratings Moody's also downgraded LyondellBasell's corporate family rating. Its action followed a recent downgrade in November.
LyondellBasell was in a tough operating environment with continued weakness in demand as it enters 2009, Moody’s said in cutting the corporate family rating to Caa2, from B3.
It also downgraded a number of other LyondellBasell debt instruments and placed the ratings on review for further downgrades, it said.
LyondellBasell is described as the world's largest independent producer of polypropylene and advanced polyolefins products, a leading supplier of polyethylene, and a global leader in the development and licensing of polypropylene and polyethylene processes and related catalyst sales.
Additional reporting by Stefan Baumgarten
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