UpdateLyondellBasell reaches $450m deal to settle creditor case

16 February 2010 15:39  [Source: ICIS news]

Lyondell reaches $450m settlement(Recasts, clarifies previous settlement in paragraph 5; adds updates throughout)

HOUSTON (ICIS news)--LyondellBasell on Tuesday announced that a $450m (€333m) settlement had been reached to satisfy a dispute with unsecured creditors, pushing the petrochemicals major closer to an emergence from US Chapter 11 bankruptcy protection.

The proposed agreement, which remained subject to court approval, final internal approval and final documentation, resolved objections by an unsecured creditor's committee. The unsecured creditor's committee objected to the company's settlement of claims against the parties who financed the 2007 leveraged buyout of Lyondell Chemical by Basell, the company said.

A committee representing unsecured creditors had sued Lyondell’s corporate parent, Access Industries, as well as the lenders and directors associated with the mergeri, accusing them of pursuing the doomed merger only to pocket millions of dollars in fees. The committee alleged that the merger drove Lyondell into Chapter 11 bankruptcy protection.

The new agreement increases the amount to be distributed to holders of unsecured claims, millennium bonds and 2015 notes to $450m from $300m, all at the expense of secured creditors. The additional $150m will be funded by a reduction in distributions to holders of the senior secured facility and bridge loan claims, Lyondell said.

Lyondell previously filed a motion asking the court to approve a $300m settlement, at the expense of secured creditors.

Lyondell said the dispute had limited its ability to complete approval of its disclosure statement and reorganisation plan, and as part of this agreement, all sides have agreed to support the company’s reorganisation plan, the company said.

“The proposed settlement is not conditioned on the success of any particular proposal to raise new capital for LyondellBasell upon emergence,” the company said in a statement.

“We will continue to work with all parties to design a confirmable plan of reorganisation that maximises value for our creditors while improving the financial stability of the reorganized company,” it added.

The company said its reorganisation plan and disclosure statement would be revised to implement the new agreement and current agreements among various creditor constituents.

Specifically, the plan will reflect the agreement to convert about $18bn of senior and bridge debt into common equity and allocate such equity between the holders of that debt upon the plan’s confirmation.

LyondellBasell filed for US bankruptcy protection in January 2009. It was formed in 2007 when Lyondell and Basell merged.

Additional reporting by Stefan Baumgarten

($1 = €0.74)

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