NPRA ’09: Lyondell will lose its debt, keep its core - exec

30 March 2009 20:39  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS news)--The Lyondell Chemical that emerges from US bankruptcy will be largely similar in core functions to the one that went into bankruptcy, but without a $25bn (€17bn) debt load, a top company executive said on Monday.

LyondellBasell’s US business plans to emerge from bankruptcy by the end of 2009, said J Vaughn Deasy, senior vice president, olefins and aromatics Americas.

The plunge in demand in the fourth quarter of 2008 was the decisive factor in Lyondell Chemical’s bankruptcy filing, but the company had also been saddled with $25bn in debt, Deasy said on the sidelines of the 2009 International Petrochemical Conference (IPC), sponsored by the National Petrochemical & Refiners Association (NPRA).

The reduction of that debt through the bankruptcy process will result in a stronger company, Deasy said, adding he expects the new LyondellBasell will retain its present core functions.

LyondellBasell is the largest polyolefins producer in the world, with $7.5bn in polypropylene (PP) business and $5.5bn in polyethylene (PE) business, according to Townsend Solutions.

Deasy said the company’s US operations decided in mid-December to seek bankruptcy protection amid a precipitous drop in product demand. Demand for olefins fell 11% last year and was expected to drop by another 3-5% this year, a condition that poses a challenge to the producer’s timeline to emerge from bankruptcy by the end of 2009, Deasy said.

The producer has received $3.25bn in debtor-in-possession (DIP) financing to provide it with new liquidity, and plans to produce a draft reorganisation plan by mid August, Deasy said.

Chapter 11 bankruptcy protection has given the producer some needed flexibility, he added.

“The capabilities that are allowed under Chapter 11 bankruptcy gave us increased flexibility to move forward with our Chocolate Bayou plant rationalisation that we normally wouldn’t have had,” Deasy said. “Accepting and rejecting [existing] contracts is one of the things that come with being under Chapter 11 protection.”

When asked whether in hindsight Lyondell could have avoided bankruptcy, Deasy said, “I don’t think we can fault what occurred with our management – that is not a cop-out.”

($1 = €0.75)

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By: Brian Ford
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