11 March 2010 23:21 [Source: ICIS news]
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HOUSTON (ICIS news)--Lyondell's plan to leave Chapter 11 bankruptcy protection took a big step on Thursday, with the court approving a string of motions critical to its reorganisation plan.
Lyondell is now on track to have its reorganisation plan confirmed as early as 23 April, the company said.
"Today is a very significant day in our Chapter 11 process," according to a statement by David Harpole, company spokesman. "This milestone has been more than 14 months in the making."
The company filed for bankruptcy protection in January 2009.
The items approved by the court include Lyondell's disclosure statement, its $450m (€329m) partial settlement with creditors and its equity offering.
The partial settlement is connected to the company's merger with Basell.
A committee representing unsecured creditors had sued Lyondell’s corporate parent, Access Industries, as well as the lenders and directors associated with the merger.
The unsecured creditors committee accused them of pursuing the merger only to pocket millions of dollars in fees. The committee alleged that the merger drove Lyondell to file for Chapter 11 bankruptcy protection.
The settlement dismisses only the lenders from the lawsuit, so the creditor committee could still pursue the directors and managers.
Lyondell had said that the lenders must be dismissed from the lawsuit before it can emerge from bankruptcy protection. Otherwise, had the trial taken place against the lenders, it could have lasted for weeks, costing Lyondell tens of millions of dollars.
In addition to approving the settlement, the court also approved Lyondell's equity offering, another key part of the company's strategy to emerge from bankruptcy protection.
Under the equity offering, Lyondell would convert about $18bn of senior and bridge-loan debt into class A shares in the company.
In addition, Lyondell would sell nearly 264m class B shares, representing $2.55bn.
Another 24m shares - representing $250m - would be purchased by three firms backstopping the equity offering.
Those firms are LeverageSource, an affiliate of Apollo Management; LBI Investment, an affiliate of Access Industries; and Ares Corporate Opportunities Fund III, an affiliate of Ares Management.
By backstopping the offering, the three firms have agreed to purchase any unsold shares.
Specifically, Apollo is committed to purchase up to $1.5bn in shares; Access is committed to buy up to $806m; and Ares is committed to buy up to $476m.
Ultimately, Lyondell plans to have its shares listed on the New York Stock Exchange (NYSE).
In addition, the court approved Lyondell's disclosure statement, a document that creditors use to decide whether they will support or oppose the company's reorganisation plan.
Lyondell can now begin soliciting support for its reorganisation plan.
Lyondell has a 15 April deadline to gather enough support for the plan, according to court documents.
With enough support, Lyondell can present the plan to the bankruptcy court for confirmation.
Lyondell could present the plan to the court as early as 23 April, although the deadline is 20 May.
With the plan confirmed, Lyondell could then emerge from bankruptcy protection.
($1 = €0.73)
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