Engineering News

LyondellBasell Secures Access To Financing
January 08, 2009

Lyondell Chemical Co received bankruptcy court approval on Wednesday to access more than $2 billion in interim debtor-in-possession financing and an emergency $100 million loan, saying it had run out of cash.

The funding, approved at a U.S. bankruptcy court hearing in Manhattan, will allow key units of LyondellBasell, the world's third-largest maker of petrochemicals products, to keep operating.

Nearly 80 affiliates of LyondellBasell, including its U.S. operations, filed for Chapter 11 bankruptcy protection on Tuesday, weighed down by heavy debts, volatility in oil prices and reduced demand due to the economic downturn.

The company needed immediate funds to pay down more than $1 billion in debt due over the next few weeks, and has also run out of cash to fund operations, Alan Bigman, chief financial officer at Lyondell Chemical, said in court on Wednesday.

U.S. Bankruptcy Judge Robert Gerber approved the company's request to access $2.167 billion in interim debtor-in-possession (DIP) financing from a group of mostly pre-existing lenders, as well as a separate $100 million super priority emergency loan being provided by Citibank to cover a 2-day period.

"Liquidity and cash is of the first order of importance," John Rapisardi, a lawyer representing Lyondell, told the standing-room-only courtroom.

In a last minute arrangement, Access Industries, which had earlier agreed to contribute $750 million to the DIP loan, was replaced with other lenders.

The $2.167 billion is the first part of a total $8 billion proposed debtor-in-possession financing package.

The deal is made up of $3.25 billion in new funding, $3.25 billion of pre-bankruptcy loans that will be rolled into post-bankruptcy financing and another $1.515 billion to replace existing working capital facilities.

If approved, the deal would rank among the largest DIP financings ever put together.

LyondellBasell's lenders include Merrill Lynch, Goldman Sachs Group Inc, Citigroup, ABN AMRO and UBS Securities LLC, and a group of private equity firms.

Private equity firm Apollo Management LP, which says it holds more than $2 billion of a pre-existing senior secured debt facility, is one of the largest DIP lenders. Other private equity firms including Cerberus, Appaloosa, and Silver Point have agreed to fund the loans.

LyondellBasell Industries took on billions of dollars in debt a year ago, when Russian-born billionaire Len Blavatnik led a $12.7 billion leveraged buyout of Lyondell by Basell of the Netherlands.

The company, whose products range from fuels to chemicals and plastics, is owned by Blavatnik through New York-based Access Industries and is based in the Netherlands.

In a late night court session, Access agreed to drop out of the DIP loan after some other lenders expressed concerns in court that Access may have gotten better terms on its loan than other lenders.

With the exception of one German unit, the company's non-U.S. operations are not included in the Chapter 11 bankruptcy and are continuing to operate as usual.

Source: AFX News Limited

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