LyondellBasell leaves bankruptcy, ending 16-month stint

30 April 2010 20:20  [Source: ICIS news]

A Lyondell siteHOUSTON (ICIS news)--LyondellBasell left Chapter 11 bankruptcy protection on Friday, ending one of the biggest and quickest chemical reorganisations in US history.

LyondellBasell could now proceed to be listed on the New York Stock Exchange, which could happen in the third quarter.

LyondellBasell was created in December 2007 with the merger of Lyondell Chemical and Basell. The deal created the world's third largest independent chemical company, with 2009 sales of $30.8bn (€23.4bn).

Roughly a year after its merger, LyondellBasell filed for bankruptcy protection in January 2009. The company had consolidated debt of roughly $24bn, making it the largest chemical bankruptcy after Texaco.

Its nearly 16-month stint in bankruptcy protection made it one of the quickest reorgansiations among chemical companies.

To help pay for its emergence from bankruptcy protection, LyondellBasell raised $3.25bn of debt as well as $2.8bn through a rights offering.  

LyondellBasell issued approximately 564m shares of common stock.

The stock issuance was a key part of LyondellBasell's reorganisation plan. In addition to raising money, the stock issuance also allowed Lyondell to exchange its debt for equity in the company.

The equity offering was 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. 

LyondellBasell was leaving bankruptcy with $5.2bn of net consolidated debt and about $3bn of opening liquidity, the company said.  

The reorganisation created a new parent holding company, LyondellBasell Industries, incorporated in the Netherlands. The company's corporate seat would be in Rotterdam, LyondellBasell said, with administrative offices in Rotterdam and Houston.

"This marks a new beginning for LyondellBasell," according to a statement by Jim Gallogly, CEO. "We emerge from bankruptcy as a stronger, leaner, more competitive company, with an improved balance sheet and liquidity, intent on making LyondellBasell the industry leader," he said.

"We can now devote our full attention to making LyondellBasell the best company in our industry, committed to operational excellence, further improving our competitiveness, and most of all, serving our customers," Gallogly continued. "We will continue to develop and deliver the innovative products and technologies our customer's value."

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 could damage Lyondell's reputation as customers, vendors and employees could gradually lose confidence.

($1 = €0.76)

For more on LyondellBasell visit ICIS company intelligence
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By: Al Greenwood
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