LyondellBasell mulls stock offering to raise funds to exit bankruptcy protection

16-Sep-09

A sudden cash crunch at the beginning of the year had forced LyondellBasell to seek bankruptcy. To help the company exit bankruptcy protection, the bankrupt petrochem maker is mulling a stock offering to raise funds. The petrochem major has filed its Chapter 11 reorganization plans with the New York bankruptcy court, wherein the company and its 94 bankrupt affiliates will simplify its corporate structure and position the company to exit bankruptcy protection with significantly less debt. An initial court hearing on the company's reorganization plan is scheduled for October 14. The company's reorganization plan is subject to a creditor vote and court approval. Lyondell plans to repay administrative, tax and other priority claims in full and repay the new money portion of its DIP loan in full. The holders of the "rolled up" portion of the DIP loan will receive new notes or cash in the full amount of their loan. Pre-bankruptcy senior lenders will receive new common stock in the reorganized company. Restructuring of its European debt will also be part of the plan and a litigation trust will be created to deal with a pending lawsuit that Lyondell's official creditors committee has brought against the banks, advisors and executives that put together the 2007 merger with Basell. The suit, which is scheduled to go to trial on Dec. 1, claims the US$12.7 bln merger set Lyondell up to fail by loading the company with too much debt. LyondellBasell was created out of a 2007 leveraged buyout led by Access Industries, that left the company with a heavy debt load. The company hopes to obtain confirmation of its bankruptcy plan from the court in December and exit bankruptcy protection later this year or early in 2010.