23 September 2009 10:14 [Source: ICIS news]
(Recasts lead and repositions analyst's comments)
SINGAPORE (ICIS news)--LyondellBasell has reiterated its plan to exit bankruptcy protection amid market speculation over Reliance Industries' possible acquisition of the debt-ridden chemical producer, according to a LyondellBasell official and analysts on Wednesday.
“We remain on track to emerge from Chapter 11 near the end of the year as a stronger company and a more viable business partner with a solid capital structure,” said LyondellBasell spokesman David Harpole in an e-mailed statement to ICIS news.
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“We do not comment on rumours, speculation or conjecture concerning our company,” Harpole said.
Reliance Industries also did not comment on the reports of its possible acquisition of LyondellBasell.
“If it turns out to be true, then definitely it would be one of the biggest acquisitions done in the past few years,” said Vinay Nair, an India-based equity analyst with Khandwala Securities.
LyondellBasell is considered as one of the world’s largest polymers, petrochemicals and fuels companies, with a presence in Asia through HMC Polymer in
“Going global and capitalising on the dynamics of different markets could be a good strategy for [Reliance]. It does not sound irrational, considering the lower margin outlook in the global petrochemical industry,” said Nair.
There are concerns in the petrochemicals industry over additional capacity coming from new plants in the Middle East and
According to Nair, Reliance Industries has the financial capability to take on major acquisitions at this time, but the timing may not be right, as the company is currently embroiled in a legal battle over gas supplies with Reliance Natural Resources Ltd (RNRL).
Khandwala Securities currently has a “reduce” recommendation on the stock of Reliance Industries, with a target price of rupee (Rs) 1,900/share ($39.26/share), which may be revised soon, said Nair.
A reorganisation plan for the company was submitted to a US bankruptcy court this month and is awaiting approval.
“We are focused on having these documents approved,” said LyondellBasell's Harpole.
LyondellBasell is trying to claw its way back into financial health, with plans to list on the New York Stock Exchange (NYSE) after it exits bankruptcy.
“We are proceeding with a rights offering, which will be used to provide additional liquidity after emergence from Chapter 11. The number of new shares to be issued and the stock valuation will be addressed in the coming weeks,” said Harpole.
($1 = €0.68/$1 = Rs48.39)
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