LyondellBasell Industries (LB) has reached an agreement that could help it emerge from Chapter 11. LB’s unsecured creditors swapped sides after being offered an extra US$150 mln worth of shares. Unsecured creditors, including bond holders, are estimated to hold around US$3 bln of debt and had unfalteringly supported Reliance Industries Ltd (RIL) as it contested with LB management to take control of the company. The unsecured creditors, organized under the 'Creditors' Committee' had alleged that the management and secured creditors had wrongfully brought about a cross-Atlantic merger that was 'engineered to fail.' LB management managed to win over most secured creditors in December 2009 by promising to convert all of their US$18 bln debt into company equity. LB will now file a third amended plan of reorganization which will give US$150 mln worth of shares in the post-bankruptcy company to the unsecured creditors. The new agreement increases the amount that will be distributed on the effective date of the Plan to the holders of general unsecured claims from US$300 mln to $US450 mln. As part of the new agreement, the Unsecured Creditor's Committee, substantial holders of the senior debt and bridge debt and the 2015 Notes Trustee have agreed to support LyondellBasell's Plan.
Interestingly, the US$150 mln worth of shares to be handed over to the unsecured creditors will be appropriated from the portion allocated to secured lenders. The company said it now expects to emerge from bankruptcy protection as none of the material stakeholders are expected to oppose its reorganization plan. Under US laws, the company's reorganisation plan must win the approval of all classes of debtors.