Global polyolefins giant LyondellBasell Industries AF SCA is emerging from bankruptcy April 30, with new ownership and only a fraction of the debt it was struggling with just 15 months ago.
The firm now will be known as LyondellBasell Industries NV and will continue to be based in Rotterdam, the Netherlands, with a North American headquarters in Houston. Its reorganization plan was confirmed April 23 in U.S. Bankruptcy Court in New York.
“We emerge from Chapter 11 as a stronger company and business partner,” CEO Jim Gallogly said in an April 23 news release. “Our industry-defining technologies, global reach and focus on operational excellence will provide LyondellBasell with a bright future.
“Through this reorganization we have solidly positioned the company to be an industry leader with a significantly improved balance sheet, excellent liquidity, a more efficient organizational structure, and a new management team,” Gallogly said.
When it filed for Chapter 11 bankruptcy in January 2009, LyondellBasell had debt of almost $24 billion. Now, $18 billion of that debt has been converted into equity in the firm, spokesman David Harpole said by phone April 28. The firm now has roughly $7 billion in debt.
After debt conversion, New York private equity firm Apollo Management LP is the largest stakeholder in the firm, with a share of about 25 percent, Harpole said. Former owner Access Industries, a New York-based investment firm, will be among the five largest stakeholders, he added.
“This was a very complex case, and we were able to address a number of issues in a short amount of time,” Harpole said. “Fifteen months is an extremely short period of time [to exit bankruptcy] when you consider how complex this was.”
Access bought Basell from BASF AG and Royal Dutch/Shell Group for $6 billion in 2005 and in 2007 acquired Lyondell Chemical Co. for $19 billion. In bankruptcy court filings, LyondellBasell has said that the acquisition of Lyondell was done with 100 percent debt financing.
Global economic turmoil and lower plastics and chemicals demand hit LyondellBasell hard in 2008, leading to the bankruptcy filing. Access then sold half of the business for an undisclosed amount in May 2009 to ProChemie Holding Ltd. of Oberndorf, Germany.
LyondellBasell employs more than 15,000 and ranks as the largest maker of polypropylene in both North America and the world. In North America, the firm also ranks second in markets for high and low density polyethylene.
In 2009, LyondellBasell rang up sales of almost $31 billion — a drop of almost 40 percent from 2008. But the firm registered an operating profit of $317 million in 2009 after an operating loss of more than $5.9 billion the year before.
Based on sales, LyondellBasell ranks as the world's third-largest independent chemical company, officials said. About 54 percent of its overall 2009 sales came from North America.
In both the Americas and Europe/Asia, LyondellBasell's PE production grew in 2009, while its PP output fell. PE production in the Americas grew about 6 percent to 5.6 billion pounds, while in Europe/Asia, it increased almost 3 percent to 4.9 billion pounds.
PP production in the Americas fell 14 percent during 2009 to 2.5 billion pounds. In Europe/Asia, PP output slipped about 2 percent to 6.9 billion pounds.
Earlier this year, LyondellBasell announced it would close a PP plant in Terni, Italy, eliminating about 120 jobs and almost 600 million pounds of annual capacity. Overall, LyondellBasell is in the process of cutting 3,000 jobs worldwide by the end of this year. It began that process in late 2008 and had cut about 1,200 jobs by the end of last year.
In the midst of its financial reorganization, LyondellBasell also managed to negotiate a potential sale of the firm to Reliance Industries Ltd. of India. Reliance's final bid was rumored to be around $14.5 billion, but was declined in February after LyondellBasell officials expressed a number of concerns, including Reliance's desire for governance and shareholder control while owning less than half of LyondellBasell's equity.
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