Volker Trautz, LyondellBasell CEO, said in a release that the company has been working with its creditors and equity holders to restructure the business in a way that “reflects the realities of today’s market environment and positions us for the future.” Trautz alluded to the ubiquity of LyondellBasell’s key products, saying “Our core businesses—fuels, chemicals, plastics, and technology—are fundamental to the global economy,” inferring that this setback is temporary, and demand for basic materials, like the polyolefins in which it holds global leadership positions , will return. Still, the global downturn has not spared commodity materials, no matter how widely used, with Alcoa, the world’s largest supplier of aluminum, announcing plans to cut 15,000 jobs one day after LyondellBasell’s move.
The filing was made in New York at the Southern District courthouse in Manhattan and applies to LyondellBasell’s operations in the U.S. and Basell Germany Holdings GmbH. The company had already announced plant to cut headcount, capital expenditures, and working capital, as well as idling certain facilities. On Dec. 18, the company’s Equistar Chemicals LP unit announced the temporary idling of its olefins unit at Chocolate Bayou, TX. The facility has annual, nameplate capacity of 1.2 billion lb for ethylene and 725 million lb of propylene. In a November summary of liquidity and net debt, the company stated that at the end of the third quarter of 2008, ending Sept. 30, it had $1.7 billion in available liquidity and $25 billion in net debt, including $159 million in short-term investment. On Dec. 30, the company responded to Standard & Poor’s definition of its corporate credit rating as “selected default” by saying it should not be misinterpreted to suggest that LyondellBasell was currently in default of its bank agreements.
The drop in resin sales, production, and prices experienced industry-wide has been pronounced. In a November presentation to investors reviewing third quarter 2008 figures, LyondellBasell reported that polypropylene (PP) and polyethylene (PE) volumes were down 17% from the previous quarter. According to the American Chemistry Council’s most recently released U.S. resin-production statistics, the manufacture of major plastic resins in September 2008 was 4.1 billion lb, down 40% from the same time in 2007, while year-to-date U.S. resin production was down 8.7%. In key LyondellBasell resin polypropylene (PP) September 2008 sales and captive use in the U.S. was 1.308 million lb, down 17.7% from 1.589 million lb in September 2007. For the first nine months of the year, U.S. sales and captive use of PP was 13.196 million lb, off 10.8% from 14.795 million lb for the same time period in 2007.
Privately owned by Leonard Blavatnik’s Access Industries, LyondellBasell employs 7800 people in approximately 30 locations throughout the U.S. It was created in 2007 when Access, through Basell, paid $48/share ($19 billion with assumed debt) for Lyondell Chemical (Houston). Access purchased Basell in 2005. Globally, the combined company employs 16,000 at more than 60 locations. Prior to the purchase of Lyondell, Basell planned to buy portions of chemical and resin manufacturer Huntsman for $9.6 billion, but was outbid by Apollo Management’s Hexion Specialty Chemicals (Columbus, OH). Basell was also reported to be in the bidding for the former GE Plastics, which was eventually purchased by SABIC. —[email protected]