06 January 2009 22:45 [Source: ICIS news]
By Al Greenwood
(Adds detail, statements by Volker Trautz throughout)
HOUSTON (ICIS news)--The US operations of financially stricken chemical major LyondellBasell and one of its European holding companies filed for bankruptcy protection in the US on Tuesday.
The filing by affiliate Lyondell Chemical listed debts of $19bn (€14bn) and assets of $27bn, according to court documents.
The company also announced that, pending court approval, it has made arrangements for up to $8bn in debtor-in-possession (DIP) financing to fund continuing operations.
Of this total, $3.25bn consists of new funding; $3.25bn represents a refinancing of certain obligations under LyondellBasell's existing senior secured credit facilities; and $1.515bn represents replacement of existing working capital facilities.
Under bankruptcy protection, a company continues its day-to-day operations while it reorganises its finances. In the meantime, it is protected from creditor lawsuits. Altogether, the filing will cover 79 affiliates.
The Chapter 11 filing in federal bankruptcy court in New York state applies to LyondellBasell's operations in the ?xml:namespace>
LyondellBasell's non-US operating entities will continue to function independent of the Chapter 11 process, the company said.
"We have been working collaboratively with our creditors and our equity holder on a financial restructuring that reflects the realities of today's market environment and positions us for the future," said CEO Volker Trautz.
The largest creditors include the Bank of New York, which is the trustee for $615m in notes. The bank is the trustee for an additional $241.4m in notes for Millennium
LyondellBasell filed for protection in the southern district of the bankruptcy court in
The filing came after the company missed a Sunday deadline to pay $281m in interest and fees.
LyondellBasell was formed in 2007 in a highly leveraged $12.7bn deal, in which Lyondell merged with Basell, a Dutch producer. Basell was a unit of Access Industries.
After the merger, credit markets tightened while demand for petrochemicals collapsed, constraining the liquidity of the company.
"During the past two quarters, we have seen a dramatic softening in demand for our products and unprecedented volatility in raw materials costs,” Trautz said in a press statement.
“December was particularly difficult, as many of our customers postponed orders to reduce their inventories,” Trautz continued. “Though we currently anticipate this situation to be short-term and expect customers to increase their purchasing in 2009, we made the decision to file Chapter 11 in order to provide the company with the time and resources necessary to facilitate an orderly restructuring and position the business for the long term.”
He added, "During the reorganization period, our goal is for the company to continue its operations and its relationships with customers and suppliers in the normal course."
Additional reporting by Brian Ford
($1 = €0.74)
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