LyondellBasell reiterates business plan amid reported RIL bid

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.

LyondellBasell downplayed media reports about Indian conglomerate Reliance Industries' interest in buying the company for $3.25bn (€2.21bn).

“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 Thailand and Polymirae in South Korea.

“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 China at a time when demand is expected to remain in the doldrums.

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.

LyondellBasell’s US operations sought bankruptcy protection under Chapter 11 of the US Bankruptcy Code in December last year.

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.

US chemical firm Lyondell delisted from the New York bourse when it merged with the Netherlands’ Basell in 2007.

“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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By: Pearl Bantillo
+65 6780 4359



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