Corrected: LyondellBasell struggles to make payments

03 January 2009 02:06  [Source: ICIS news]

LyondellBasell considers bankruptcy protectionCorrection: In the ICIS news story headlined “LyondellBasell struggles to make payments” dated 3 January 2008, please read in the first paragraph … $281m (€200m) … instead of … $181m (€129m) …. A corrected story follows.

HOUSTON (ICIS news)--LyondellBasell continued to seek an agreement with lenders after it was revealed the financially stricken chemical giant had a 4 January deadline to pay $281m (€200m) unless it could reach a new arrangement, according to a filing with the Securities and Exchange Commission (SEC).

The debt-laden chemical major, which is mulling bankruptcy as an option, said in a 31 December filing that it had reached an agreement with its lenders to postpone until 4 January the payment of $160m in fees under a bridge loan and $121m in interest.

The bridge loan fees had been due on 29 December and the interest payments had been due on 29 December and 31 December, the company said.

LyondellBasell also revealed in the filing that it was denied a credit extension by an affiliate of the Access Group, the chemical producer’s parent organisation.

“Such request has been denied by the lender,” LyondellBasell said. “We disagree with the basis for this denial.”

The Netherlands-based producer said it had appointed Kevin McShea of AlixPartners as its chief restructuring officer, “effective upon formal entry of an order by the Bankruptcy Court approving the services agreement”.

A subsidiary of AlixPartners would receive a “contingent success fee” of up to $7m “if the company confirms a plan of reorganisation that becomes effective or completes one or more transactions that transfers a significant portion of the business as a going concern.”

LyondellBasell has incurred $26bn in debt, according to Standard and Poor’s rating service.

The producer’s markets “markets have been experiencing a softening of demand combined with an unprecedented fall in raw material costs,” it said in the SEC filing.

“The recent unprecedented fall in commodity prices and the consequent reduction in our borrowing base, as well as recent changes in demand from our customers have placed severe demands on our liquidity.”

($1 = €0.71)

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By: Brian Ford
+1 713 525 2653

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