Houston, Texas - In response to a preliminary offer from India's Reliance Industries Ltd to buy a controlling interest in LyondellBasell, the polyolefins company said the Reliance move "represents a potential alternative to the initial plan of reorganisation previously filed by the company.|
LyondellBasell's US operations and one of its European holding companies filed for Chapter 11 bankruptcy protection in January, citing drastic drops in demand for plastics and chemicals. The firm is struggling with a massive $23 000 million debt load connected to Basell NV's $19 000 million purchase of Lyondell Chemical Co. to form the new entity in late 2007. Access Industries purchased Basell for almost $6000 million in 2005.
As well as a huge polyolefins business, LyondellBasell is the world's largest producer of propylene oxide (PO), used to make polyols, propylene glycols and propylene glycol ethers for the polyurethanes sector. LyondellBasell has a total of 2100 kilotonnes-per-annum capacity for PO, from two plants in the US, three in Europe and a joint-venture plant in Japan.
Reliance Industries is a vertically integrated company with interests in polyester, fibre intermediates, plastics, petrochemicals and petroleum refining. This would enable it to provide feedstock for LyondellBasell, which it currently buys from Shell and Hoechst.
Neither company revealed the size of the bid, but many news reports gave a figure of $12 000 million. (When Plastics News reported in late September on the possibility of Reliance making a bid, the figure reported was only $3000 million.)
Since its move into Chapter 11, LyondellBasell has been restructuring its business, to cut $700 million in fixed costs by the end of 2010. The efforts involve closing at least 10 manufacturing plants and 20 offices and research sites and cutting 3000 jobs.
The firm has announced the closing of a high density polyethylene (HDPE) plant in Alvin, Texas. Since early 2008, LyondellBasell also has closed polypropylene plants in Sarnia, Ontario, and Varennes, Quebec, and LDPE plants in Bayport, Texas, and Fos-sur-Mer, France.