By Don Loepp, Plastics News
Rotterdam, The Netherlands -- The US operations of LyondellBasell Industries AF SCA, plus one of its European holding companies, filed for voluntary reorganisation under Chapter 11 of the US Bankruptcy Code on 6 Dec.
Chief executive officer Volker Trautz blamed "a dramatic softening in demand" for the company's products and "unprecedented volatility in raw material costs."
Noting that the Rotterdam-based company has already announced plans to reduce headcount, cut spending and idle plants, Trautz added: "We are aggressively exploring additional ways to lower our costs and streamline operations in response to a very difficult global economic environment."
The company also announced that, pending bankruptcy court approval, it has made arrangements for up to $8 billion in debtor-in-possession financing to fund continuing operations.
Of this total, $3.25 billion consists of new funding; $3.25 billion represents a refinancing of certain obligations under LyondellBasell's existing senior secured credit facilities; and $1.515 billion represents replacement of existing working capital facilities.
"We have been working collaboratively with our creditors and our equity holder on a financial restructuring that reflects the realities of today's market environment and positions us for the future," Trautz said in a news release.
The Chapter 11 filing applies to LyondellBasell's operations in the US and one of its European holding companies, Basell Germany Holdings GmbH. The US companies filed for Chapter 11 protection in US Bankruptcy Court in New York.
"Though we currently anticipate this situation to be short-term and expect customers to increase their purchasing in 2009, we made the decision to file Chapter 11 in order to provide the company with the time and resources necessary to facilitate an orderly restructuring and position the business for the long term," Trautz said.
He added that the company's goal is "to continue its operations and its relationships with customers and suppliers" during the reorganisation. LyondellBasell employs 16 000 worldwide, including 7800 in the US.
In the filing, the company listed assets of $33.4 billion and liabilities of $29.9 billion.
LyondellBasell is the world's largest maker of polyolefins. The company is the No. 1 maker of PP in North America and the world. The company also holds the No. 2 slot in both high and low density polyethylene in North America.
The group is also a major producer of propylene oxide (PO), used to make polyols, propylene glycols and propylene glycol ethers for the polyurethanes sector. LyondellBasell has about 2100 kilotonnes per annum capacity for PO at two plants in the US, three in Europe and at a joint venture plant in Japan.