(Adds comment from Access Industries' Blavatnik)
By Chelsea Emery and Matt Daily
NEW YORK, Jan 6 (Reuters) - The U.S. operations of
LyondellBasell, the world's third-largest petrochemical
company, filed for bankruptcy protection under the weight of a
massive debt load and slumping demand for its products.
The company had taken on billions of dollars in debt
obligations a year ago, when billionaire Len Blavatnik led a
$12.7 billion leveraged buyout of U.S. firm Lyondell by Basell
of the Netherlands.
The New York bankruptcy filing on Tuesday included almost
80 units of the company and encompassed its U.S. operations and
a European financing arm. The company's non-U.S. operations are
not included in the Chapter 11 bankruptcy and are continuing to
operate as usual.
LyondellBasell Industries, whose products range from fuels
to chemicals and plastics, is owned by the Russian- born
Blavatnik through New York-based Access Industries and is based
in the Netherlands.
The U.S. operations have obtained $8 billion in
debtor-in-possession financing to help fund operations,
including $750 million from Access Industries.
The privately held company, which operates a massive
refining and processing plant in Houston, has suffered from
plunging demand for chemicals as industries such as autos,
housing and electronics weakened. Tight credit markets have
made renegotiating debt difficult.
NOT ALONE
The company is not alone in its struggles.
"We're getting back to the kind of scenario that played out
earlier this decade when we had five or six defaults per year,"
said Kyle Loughlin, analyst with Standard & Poor's.
"We've have seen a lot of LBOs in the chemical sector in
the five years preceding 2008, and we have a number of very
highly leveraged companies in the sector. They obviously would
be a group of companies that we are watching."
Among LyondellBasell's largest creditors were Venezuelan
oil company Petroleos de Venezuela (PDVSA), Algerian energy
group Sonatrach, Exxon Mobil Corp and Dow Chemical Co.
LyondellBasell's lenders include Merrill Lynch, Goldman
Sachs Group Inc, Citigroup Inc, ABN AMRO and UBS Securities LLC, according to filings.
LyondellBasell, which employs 17,000 workers and had
revenue of $44.7 billion in 2007, has seen its liquidity drop
to $639 million currently from $1.67 billion at the end of the
third quarter, falling short of its quarterly interest and
maintenance costs.
Its products are used in numerous products including fuels,
rigid and flexible packaging, plastic pipe, detergents,
cosmetics, electronics and appliances.
DIP FINANCING
Of the DIP financing, $3.25 billion is new funding, another
$3.25 billion represents a refinancing of some obligations
under LyondellBasell's existing senior secured credit
facilities and $1.515 billion represents replacement of
existing working capital facilities, the company said in a
release. The funding will be used to help restructure its
debts.
Access Industries will contribute $750 million of the new
funding, the company said in a release.
"Access is committed to help LyondellBasell position for
long-term success by addressing the challenges caused by the
global economic crisis," Blavatnik said in a statement.
The bankruptcy filing was made in the U.S. Bankruptcy Court
for the Southern District of New York (case numbers
09-10021-reg and 09-10023-reg).
(Additional reporting by Anna Driver in Houston)
(Reporting by Chelsea Emery and Matt Daily; Editing by Andre
Grenon and Matthew Lewis)
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