UpdateLyondellBasell confirms missed bond payments in Europe

(Releads and updates throughout)

LONDON (ICIS news)--LyondellBasell Industries has failed to make interest payments on two European bonds due for Sunday 15 February, a spokesman from the Netherlands-based chemicals producer said on Tuesday.

The company confirmed a report by credit watchdog Standard and Poor's (S&P), which downgraded LyondellBasell's credit rating to D from SD after its European business failed to pay interest on bonds of $615m (€480m) and $500m which mature in 2015.

Another credit ratings agency, Fitch Ratings, said it had withdrawn its ratings for the LyondellBasell group, as well as coverage of several of its subsidiaries, following reports on the missed bond payments.

LyondellBasell’s US operations filed for Chapter 11 bankruptcy protection on January 6 after a filing by affiliate Lyondell Chemical which listed debts of $19bn.

S&P said the company had 30 additional days to make the payments but did not think they would be made.

The ratings agency added that subsidiary Basell Finance Co was also likely to miss an additional bond payment on March 15 for a $300m issue due 2027.

A spokeman from LyondellBasell would not comment on whether the company was able to hit the deadlines.

Although subsidiaries of the company have filed for bankruptcy, the holding company itself remained solvent – as well as some of its business units.

Last Tuesday, a US bankruptcy court has issued a temporary restraining order in favour of LyondellBasell, shielding it and its solvent companies from creditors trying to collect on roughly $1bn (€770m) in notes and over $125m in debts covered by guaranties.

“We view LyondellBasell's liquidity as weak because it has limited access to the debtor-in-possession (DIP) financing facilities of its chapter 11 filed subsidiaries,” said S&P.

S&P added that it expected LyondellBasell’s operating cashflow generation to remain very weak in the coming months due to declining demand for plastics and low global capacity utilisation.

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.

($1 = €0.78)

To discuss issues facing the chemical industry go to ICIS connect
For more on LyondellBasell visit ICIS company intelligence