After a 15-month reorganization, chemical and polyolefin giant LyondellBasell is projected to emerge from Chapter 11 protection on April 30, 2010, cutting its debt from $24 to $7.2 billion. Andreas Anker, head of global marketing communications, told MPW during a visit to the company's office in Frankfurt, Germany that the reorganization was approved last Friday, April 23, and that the company expects to be listed on the New York Stock Exchange (NYSE) by the third quarter. He said LyondellBasell is seeing improvement in all of the markets it serves, including automotive and building and construction, with sales of polyolefins into pipe extrusion benefiting from stronger B&C demand.
The company will be at the K show this year (Düsseldorf, Germany; Oct. 27-Nov. 3) after missing the event in 2007. The company had declared bankruptcy on Jan. 6, 2009, pressured by a global contraction in resin demand and the burdensome debt structure that resulted from its creation.
As part of the reorganization, a new parent holding company was formed. That business, LyondellBasell Industries N.V., is a public limited liability company incorporated in the Netherlands. LyondellBasell Industries AF S.C.A., a Luxembourg company which was the former parent holding company, will no longer be a part of LyondellBasell. LyondellBasell's corporate seat will be in Rotterdam, with administrative offices in Houston and the Netherlands.
LyondellBasell is planning to list the reorganized company on the NYSE, with approximately 563.9 million shares of common stock to be issued. That includes 300 million shares of Class A common stock issued in exchange for allowed claims under the plan. Approximately 263.9 million shares of Class B stock are being issued in connection with the rights offering.
LyondellBasell emerges from Chapter 11 after having raised $3.25 billion of first priority debt, including $2.25 billion and €375 million offerings of senior secured notes in a private placement and borrowings of $500 million under a senior term loan facility as part of its exit financing. The sale of the notes, borrowings under the term loan, a new European securitization facility, and proceeds from a $2.8 billion rights offering will be used to repay and replace certain existing debt.
Upon emergence from Chapter 11, the company expects to have approximately $7.2 billion of total consolidated debt and approximately $5.2 billion of net consolidated debt, including approximately $2 billion of cash and cash equivalents. There will also be approximately $2.4 billion of lending commitments under an asset-backed lending facility in the U.S. and a European revolving trade accounts receivable securitization, of which approximately $1 billion will be undrawn at emergence.
The organizational structure of the company in North America will be simplified by the removal of 90 legal entities, with ownership of 49 of these transferred to a new owner, the Millennium Custodial Trust.
According to Dow Jones Daily Bankruptcy Review a group of unsecured creditors will recoup about $0.17 on the dollar after settling a lawsuit against senior lenders, including Citigroup, UBS AG and Goldman Sachs Group, over the 2007 merger that created LyondellBasell. The report noted that unsecured creditors, who will be paid in cash and new stock, had rejected LyondellBasell's plan for months.
In the midst of its reorganization, Indian energy and petrochemical giant, Reliance Industries, made multiple bids for LyondellBasell, with that company's board rejecting the most recent offer in March. In February, the company reported that its performance for that month was $90 million ahead of its plan, with year-to-date results at the time $65 million ahead of its plan.
LyondellBasell is the world's third-largest independent chemical company with 2009 sales of $30.8 billion. The company manufactures products at 59 sites in 18 countries, including joint ventures. Approximately 54% of 2009 revenues were generated from sales in North America, 35% from sales in Europe, and 11% from sales in the rest of the world.