By Anthony Clark, Plastics & Rubber Weekly
London -- The Indian business media is abuzz with rumours that the country's Reliance Industries Ltd (RIL) is planning to purchase some or all of LyondellBasell, currently in Chapter 11 bankruptcy protection. The deal could be worth $3250 million.
The suspected move, first reported on an Indian business TV channel, was seemingly news to LyondellBasell spokesman, David Harpole, who said he had no knowledge of any interest from Reliance Industries.
The chemicals giant is currently putting together a rights offer, possibly for October, which will add liquidity to the firm. However, according to Indian TV channel CNBC TV-18, LyondellBassell "does not know who will be rights offering sponsor".
If true, this would enable Reliance Industries to make deals directly with lenders for their share of the business, according to analysts. Key lenders include Citigroup, Royal Bank of Scotland and Bank of America-Merrill Lynch, who helped secure $8100 million debtor-in-possession financing for LyondellBasell back in February of this year.
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 in from Shell and Hoechst.
This provides an attractive synergy for both companies, according to industry observers.
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, which only last week raised $650 million via a stock sale, has refused to comment on the speculation.