LyondellBasell to exit Chapter 11

lyondellleft.jpgLyondellBasell (LBI) is to exit from Chapter 11 bankruptcy on 30 April, 15 months after entering it in January 2009.

The past 15 months have been an expensive lesson for those debt-holders who financed Basell’s purchase of Lyondell in July 2007, at the peak of the market.

LBI entered Chapter 11 with $24bn of debt. It will now exit with just $5.2bn of net consolidated debt. Holders of senior secured debt will receive 93% of the new Class A shares in exchange for their claims. The value of these will depend on the outcome of LBI’s proposed IPO in Q3. Most other original lenders are wiped out.

LBI is the world’s 3rd largest independent chemical company, with 2009 sales of $30.8bn. Its predecessors, Lyondell and Basell, were also excellent companies. This has been demonstrated by the way in which employees have maintained their morale during an immensely difficult time. The blog congratulates them, and LBI itself, on their successful exit.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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2 Responses to LyondellBasell to exit Chapter 11

  1. Steve Jenkins 27 April, 2010 at 4:51 am #

    Correct me if I’m wrong…Basell purchased Lyondell at the peak of the market, lost around $20bn of value and you are congratulating an “excellent” company on this ??? Did I miss something ?

    I’ll happily take the position of the CEO of any major chemical company if this is the criteria for success.

  2. Paul Hodges 27 April, 2010 at 7:44 am #

    Steve I think my comments on the Lyondell acquisition, from the day it was announced in July 2007, made clear my view that this was likely to prove a catastrophic mistake by top management and their lead investors. They have paid the price, literally, in terms of the debt writedown – one of the largest ever seen anywhere in the world. But the fact that LBI has survived this disaster does confirm, to my mind at least, the underlying excellence of the company’s products and people. Paul

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