LyondellBasell considers
bankruptcy filing
LyondellBasell, the
world's third-largest petrochemical company, is considering
filing for Chapter 11 bankruptcy as part of its efforts
to restructure debt, a company spokeswoman said on Wednesday.
"As we have said publicly, we are looking to restructure our
debt and we are exploring all of our options. Filing for Chapter
11 is one of those options," spokeswoman Susan Moore said.
The company said it has hired advisers, including Evercore, Alix
Partners and New York law firm Cadwalader, Wickersham & Taft
LLP, to counsel it as it restructures.
LyondellBasell disclosed in a December 29 regulatory filing that
it had begun negotiating with lenders on
extending payment dates and restructuring debt. It negotiated one postponement on
$160 million in loan-related fees, the filing said.
The company has $26 billion in debt, according to Standard &
Poor's, which slashed the company's rating to "selective
default"
on Tuesday. Moody's Investors Service also cut the company's
rating two notches, to Caa2 from B2.
LyondellBasell was created last December when Dutch-based Basell,
a unit of Russian-born billionaire Len Blavatnik's Access
Industries, bought Houston-based Lyondell.
News of a possible bankruptcy filing drove down its bonds, which
trade in London. Its 500 million euro bond, due to mature in
2015, was bid at 4 percent of face value and offered at 8
percent, down from 8 percent bid in the weeks prior to Christmas,
a trader in London said.
The company also has a $615 million bond maturing in 2015.
-----------------
2008/12/31 Bloomberg
LyondellBasell Considers
Bankruptcy Filing as Takeover Sours
LyondellBasell Industries AF, the chemicals maker controlled by
billionaire Len Blavatnik, is considering filing for bankruptcy
as a way to restructure debt that financed its $12.7
billion merger a year ago.（＝Lyondell
）
“We’re exploring all of our options,”
Susan Moore, a
spokeswoman for the Rotterdam-based company said today in an
interview. “Filing Chapter 11 is one of those
options.”
The company is
considering court protection for certain units, according to two
people with knowledge of the negotiations. They declined to be
identified because the talks are private.
The chemicals maker is struggling with a collapse in home
and auto sales that has depressed demand for everything
from car bumpers to paint. LyondellBasell’s lenders face losses of more than
90 cents on the dollar as it joins Harrah’s Entertainment Inc., Realogy
Corp. and GMAC LLC in seeking to restructure the debt-fueled
buyouts of the past two years.
“These
companies had the bad luck to add sizable amounts of leverage at
the peak of the cycle,” Christopher Garman, chief
executive officer of Garman Research LLC in Orinda, California,
said in a telephone interview.
The company’s consideration of bankruptcy was
reported earlier by the Wall Street Journal.
LyondellBasell’s $615 million of
8.375 percent notes due in 2015 were last quoted at 7 cents on
the dollar,
according to Trace, the Financial Industry Regulatory Authority’s bond-price system. The $225 million
of 9.8 percent notes due in 2020 were priced at 25 cents on the
dollar, Trace
data shows.
‘Selective
Default’
LyondellBasell is
in “selective default” after postponing $280
million of interest payments and faces a “rapidly weakening liquidity
position” with $26 billion of debt, Standard
& Poor’s analysts led by Tobias Mock in
Frankfurt wrote in a report late yesterday. The company said in
an e-mailed statement yesterday that it's “not currently in default according
to its agreements with its lenders.”
2008/12/30 Statement From LyondellBasell Related to Standard & Poor's Press Release
Following Standard & Poor's press release earlier today, LyondellBasell issued the following statement:
"Standard & Poor's definition of 'selected default' related to our corporate credit rating should not be misinterpreted to suggest that LyondellBasell is currently in default of its bank agreements. As they stated in their press release, 'This is a default in our opinion according to our definitions and criteria.' LyondellBasell is not currently in default according to its agreements with its lenders."
The company was formed by
the December 2007 acquisition of Lyondell Chemical Co. by Basell
AF, a takeover that created one of the world’s biggest plastics makers just as
the auto industry was starting on its longest slide in sales in
17 years.
U.S. auto sales dropped more than 30 percent in November, the
industry’s 13th straight monthly decline.
New-home sales in November fell 2.9 percent to a 17-year low of
407,700.
Failed Deal
The deteriorating conditions contributed to the breakup of Apollo
Management LP’s buyout of Huntsman Corp. Apollo
agreed to buy Huntsman in July 2007 for $6.54 billion in cash and
sought to cancel the transaction in June, saying the deal was no
longer viable because profits wouldn’t meet previous forecasts and the
company’s debts had increased.
Apollo agreed earlier this month to pay Huntsman $1 billion to
cancel the acquisition.
Kuwait earlier this week scrapped a plan to buy half of Dow
Chemical Co.’s basic plastics unit, depriving
the largest U.S. chemical maker of cash it planned to use to
acquire Rohm & Haas Co.
The Kuwaiti government had been under pressure from opposition
lawmakers to scrap the deal, which they said was overpriced.
Goldman Sachs Group Inc., Merrill Lynch & Co., Citigroup Inc.
and other banks arranged LyondellBasell’s debt financing, which includes $12.5 billion of
first-lien bank loans, $5.5 billion of second-lien notes and
loans and $2.5 billion of third-lien notes and loans, according to S&P.
Falling Debt
The company’s U.S. denominated senior bank debt, which is repaid first in
bankruptcy, fell from 60 cents on the dollar at the end of
October to 42 cents on the dollar, according to London-based pricing
service Markit Ltd.
Ed Canaday, a spokesman at New York-based Goldman Sachs, and
Danielle Romero-Apsilos, a Citigroup spokeswoman in New York,
declined to comment. Officials at Blavatnik’s Access Industries LLC in Moscow
couldn’t be reached to comment today.
LyondellBasell said yesterday in a regulatory filing that it
agreed with lenders to postpone paying $160 million in fees under
a bridge-loan agreement and that it hired Evercore Partners and
Alix Partners as advisers to help in restructuring the
obligations.
S&P said LyondellBasell also postponed $120 million in
interest due under notes issued by a finance unit. LyondellBasell
before the downgrade to “selective default”
yesterday was rated B-, six levels below investment grade,
at S&P.
BB+ BB BB- B+ B B-
LyondellBasell’s U.S. Operations and one of its European Holding Companies File Chapter 11 to Restructure Balance Sheet -
Company Has Commitment
for Significant DIP Financing Including $3.25 Billion of New
Funding -
Company Intends Global Business Operations to Continue Normally -
Filing Does Not Include LyondellBasell’s Non-U.S. Operating Companies
LyondellBasell Industries announced today that, in order to facilitate a restructuring of its debts, its U.S. operations and one of its European holding companies have voluntarily filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code. The company also announced that, pending Court approval, it has made arrangements for up to $8 billion in debtor-in-possession (DIP) financing to fund continuing operations. Of this total, $3.25 billion consists of new funding; $3.25 billion represents a refinancing of certain obligations under LyondellBasell's existing senior secured credit facilities; and $1.515 billion represents replacement of existing working capital facilities.
Debtor In Possessionは米国連邦倒産法11章による言葉で、占有継続債務者を意味
民事再生法等申し立てた倒産企業は、申立直後から計画認可までの期間において、運転資金を調達できずに（自社倒産のため、取引先である優良企業の手形を持っていても銀行がその割引に応じないなど）、事業の継続が困難となることがあります。このような場合において、この事業の価値を維持させるために、一時的な運転資金を速やかに融資することがDIPファイナンスです。
"We have been working collaboratively with our creditors and our equity holder on a financial restructuring that reflects the realities of today's market environment and positions us for the future," said Volker Trautz, Chief Executive Officer.
"During the past two quarters, we have seen a dramatic softening in demand for our products and unprecedented volatility in raw materials costs. December was particularly difficult, as many of our customers postponed orders to reduce their inventories. Though we currently anticipate this situation to be short-term and expect customers to increase their purchasing in 2009, we made the decision to file Chapter 11 in order to provide the company with the time and resources necessary to facilitate an orderly restructuring and position the business for the long term.
"During the reorganization period, our goal is for the company to continue its operations and its relationships with customers and suppliers in the normal course," said Trautz.
The Chapter 11 filing applies to LyondellBasell's operations in the United States and one of its European holding companies, Basell Germany Holdings GmbH.
Trautz said that the company began taking steps to control costs as demand began to weaken and raw material costs started to fluctuate.
"Over the past several months, we announced plans to significantly reduce headcount and also reduced capital expenditures and working capital," he said. "We have also idled certain facilities and reduced production and processing at others. We are aggressively exploring additional ways to lower our costs and streamline operations in response to a very difficult global economic environment.
"Our core businesses -- fuels, chemicals, plastics and technology -- are fundamental to the global economy," Trautz said. LyondellBasell's products are used in a broad range of applications and in numerous products including: transportation, fuels (gasoline and diesel), rigid and flexible packaging, plastic pipe, detergents, cosmetics, electronics, appliances, automotive parts, paints and coatings, furnishings, construction and building materials and many other industrial and consumer goods applications.
LyondellBasell's non-U.S. operating entities will continue to function independent of the Chapter 11 process. The U.S. companies filed for Chapter 11 protection in the Southern District of New York in Manhattan. A complete list of the filing entities and other information related to the Chapter 11 cases can be found through a link at the company's website, www.lyondellbasell.com. The company has also established a Restructuring Information Line, which is 866-964-5615, or in Houston, 713-309-4512. Outside the United States, callers can dial +1 713-309-4512 (English only).
LyondellBasell misses
Europe interest payment
LyondellBasell's European operations failed to make
scheduled bond interest payments on Sunday (Feb.15), a company
spokesman said on Tuesday.
The Houston-based spokesman told Reuters that the world's
third-largest petrochemicals company has a 30-day grace
period to
make the coupon before it falls into default.
Asked whether the company expects to make the payment within that
period, the spokesman declined to comment.
Standard & Poor's said earlier on Tuesday that
LyondellBasell's European operations had failed to make the
interest payments, even while the company is restructuring its
U.S. operations, which have filed for Chapter 11 bankruptcy
protection.
LyondellBasell is keen to keep its European operations from
defaulting because a bankruptcy filing in Europe is more likely
to lead to a liquidation, which would in turn threaten the
viability of the U.S. company's attempts to restructure.
Debt traders said that mid-March, the end of the grace period for
the payments, would be the key deadline in determining whether
the European business defaults on its debt.
This could also trigger payment under the European credit default
swap contracts.
The U.S. operations of LyondellBasell filed for bankruptcy
protection on January 6.
On Friday, the company obtained an extension from a New York
court to a temporary injunction preventing U.S. creditors from
making claims against its European parent, LyondellBasell
Industries AF SCA .
"The potential loss of control to a foreign liquidator would
be disastrous to the debtors' reorganisation efforts," the
company said in its court filing.
S&P downgraded the ratings on LyondellBasell's European
business to 'D' after the company failed to pay interest on $615 million (430
million pounds) and 500 million euros in bonds maturing 2015.
LyondellBasell declined to comment.
"It is my understanding that they are going to try to do
what they can to keep the European operations out of
bankruptcy," said one high-yield debt
trader.
GRACE PERIOD
"Why would they go through the nonsense of filing a court
case if they did not intend to pay the coupon?," he said,
adding that others in the market had expected the company to take
advantage of the grace period.
The injunction against creditors runs until February 23, when the
case will be reviewed. The company has asked for a longer-term
injunction.
"If they don't get the injunction extended, what's the point
of making the coupon?" a second trader said.
"There is no way I would pay the coupon before March 15 if
it is not clear" whether the court will bar creditors from
going after its European operations.
Five-year credit default swaps on LyondellBasell's European debt
were priced at 85 percent upfront bid and 90 percent offered on
few trades, the trader said.
That means that buying protection on 10 million euros worth of
its debt requires a down payment of more than 8.5 million euros
plus another 500,000 euros per year.
Investors in the bonds of LyondellBasell's European operations
have no incentive to push it into default as long as they are
paid the coupon, a debt analyst said.
But the company said in a court filing that some bondholders, who
have also bought protection in the CDS market and could make more
money if the contracts pay out, are working to push its European
operations into default.
"A subset of the 2015 Defendants is working in concert to
... force an acceleration of the 2015 notes in part or in whole
for the purpose of triggering certain credit default swaps tied
to the 2015 notes," it said.
The U.S. operations obtained an $8 billion debtor-in-possession
loan when it filed for bankruptcy, which it will use to fund its
operations as it reorganizes.
Last week, a lawyer for the company said it was seeking to emerge
from bankruptcy by year-end.
S&P said it did not think it likely that the coupon payments
would be made ahead of the mid-March deadline. The ratings agency
added that Lyondell was also unlikely to make a March 15 payment
on another European bond, a $300 million issue due 2027.
German investor buys 50% of LyondellBasell
LyondellBasell Industries, the world's largest polyolefins maker, has gained an additional owner in German investor Andreas Heeschen.
Heeschen's ProChemie Holding Ltd has joined with LyondellBasell owner Access Industries to create ProChemie GmbH, a joint venture in which each side will own 50% equity in LyondellBasell.
Both sides "will support LyondellBasell's restructuring process," officials with the new Oberndorf, Germany-based JV said in a statement. The move will have no impact on LyondellBasell's daily operations or on the Chapter 11 bankruptcy restructuring of its US business, officials added.
LyondellBasell's US operations and one of its European holding companies filed for Chapter 11 bankruptcy protection in January, citing drastic drops in demand for plastics and chemicals. The firm is struggling with a massive $23 billion debt load connected to Basell NV's $19 billion purchase of Lyondell Chemical Co. to form the new entity in late 2007. Access had purchased Basell for almost $6 billion in 2005.
Heeschen also is primary owner of firearms maker Heckler & Koch of Oberndorf. A spokeswoman said that Heeschen and ProChemie "sees value in LyondellBasell's equity and in the chemical sector in general."
New York-based Access is controlled by Russian billionaire Len Blavatnik, who in January said that LyondellBasell "is still very valuable if the economy recovers."
Last month, officials with LyondellBasell - based in Rotterdam, the Netherlands - said it needed to cut $700 million in fixed costs by the end of 2010. It will do so by closing at least 10 manufacturing plants and 20 offices and research sites and by cutting 3,000 jobs.
Most recently, the firm announced the closing of a 220,000tpa-capacity plant making high density polyethylene in Alvin, Texas. Since early 2008, LyondellBasell has also closed polypropylene plants in Sarnia, Ontario, and Varennes, Quebec, and LDPE plants in Bayport, Texas, and Fos-sur-Mer, France.
In a bankruptcy court affidavit, chemicals division President Edward Dineen said that the merger that created LyondellBasell was achieved using 100% debt financing.
"Between this and the retained debt, the combined company began 2008 with a very substantial debt load," he said. "For the company to reduce its debt load, it was critical to have a strong first year to immediately begin reducing this debt level. This did not happen for a number of reasons.''
LyondellBasell is the world's largest maker of polyolefins. The company is the number one maker of PP in North America and the world. The company also holds the number two slot in both high and low density polyethylene in North America.
---
2009/5/6 ICIS news
LyondellBasell restructuring to continue under new jv
LyondellBasell would
carry on its restructuring process under US bankruptcy protection
despite changes in the ownership of the company, corporate parent
Access Industries said on Wednesday.
Access Industries has entered into an agreement with Germany’s ProChemie Holding to form a
joint venture (jv) - to be named ProChemie GmbH - that will
control LyondellBasell.
The joint venture will be equally owned by Access Industries and
ProChemie Holding.
“The
members of the new joint venture will both support LyondellBasell’s restructuring process and seek
to identify and pursue global business opportunities,”
Access said in a
statement.
LyondellBasell's US operations filed for bankruptcy protection on
6 January in the US. The holding company followed with its own US
filing for bankruptcy protection.
The company plans to emerge from bankruptcy by the end of 2009.
The change in ownership provides Access Industries with the
flexibility to participate in the restructuring of LyondellBasell
in ways that are tax neutral for the chemical
company,
Access said.
Access Industries said it would contribute its equity ownership
in LyondellBasell in exchange for a 50% interest in ProChemie
GmbH.
The initial assets in the joint venture will comprise Access’
equity in
LyondellBasell and assets currently owned by ProChemie Holding,
an Access Industries spokesperson said.
No further financial details were available. ProChemie could not
be reached for comment.
Access Industries has already filed documents in Europe notifying
regulators of its intent to change the ownership structure of
LyondellBasell, a LyondellBasell spokesperson in Houston said.
The spokesperson said the ownership change would have no impact
on LyondellBasell’s day-to-day operations.