23 April 2010 15:30 [Source: ICIS news]
(adds missing word "damage" paragraph 15)
HOUSTON (ICIS news)--A court will consider confirming on Friday LyondellBasell's reorganisation plan, a move that could get the chemical major out of bankruptcy protection in May and on the New York Stock Exchange by the third quarter of this year, according to sources.
Court confirmation would kick off a series of events called for by the company's reorganisation plan, a blueprint for LyondellBasell's emergence from Chapter 11 bankruptcy protection.
A key part of that plan was an equity offering, under which Lyondell would convert about $18bn (€14bn) 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.
The bankruptcy court had already approved Lyondell's equity offering.
The equity offering would be backstopped by 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 agreed to purchase any unsold shares.
Specifically, Apollo was 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.
In addition to backstopping the equity offering, the three firms agreed to buy 24m shares - representing $250m.
LyondellBasell was created in December 2007 with the merger of Lyondell Chemical and Basell. The deal created the fourth largest chemical company by sales and, by capacity, the world's largest producer of polyolefins and propylene oxide.
Roughly a year later, Lyondell filed for US bankruptcy protection in January 2009. After Texaco, it was the largest chemical bankruptcy in US history.
Since filing for bankruptcy protection, Lyondell was under much pressure to reorganise as quickly as possible.
Lyondell estimated that each month in Chapter 11 cost the company $50m.
Longer term, an extended stay in bankruptcy would damage Lyondell's reputation, and customers, vendors and employees could gradually lose confidence.
($1 = €0.75)
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