LyondellBasell Leaving Bankruptcy Behind

A Manhattan bankruptcy court is allowing LyondellBasell to emerge from Chapter 11 on Friday. The company is emerging with $7.2 billion in debt, $2 billion in cash, and 2009 sales of $30.8 billion. This is a far cry from the $24 billion in debt that it had when it declared bankruptcy back in January 2009. LyondellBasell is supposed to file a Form 10—-as in 10-K’s, 10-Q’s and the like--with the SEC soon. From that document, we will see what kind of stakes Access Industries, Apollo Management, and Ares Management, as well as other creditors—ABN AMRO and so on--will get in the company. Also worth noting, Access's original equity was wiped out. It ends up with an equity stake because it had purchased bonds and got in line in bankruptcy court like everybody else. This sheds some light on why ownership of the original equity of the company was put into a joint venture with ProChemie Holding last year. For some convoluted legal reason, perhaps Access needed to form the JV to buy the bonds. We also might learn a little more about LyondellBasell's plans to go public again on the NYSE. It was one of the largest bankruptcies in recent memory. (Though, I think of LyondellBasell as more of a schooner than a sloop. And, poor Washington Mutual! It sunk before it finished loading cargo, apparently. Click on the link to get the remark.) Though, for its size, LyondellBasell is reasonably intact. There weren’t any fire sales or liquidations, and what is emerging is a company much the same as the one that filed for chapter 11. There is certainly an “Under New Management” sign on the door of its Rotterdam, headquarters, though. The bankruptcy had a couple of twists and turns. Creditors sued because they thought Access contributed to the bankruptcy by paying too much for Lyondell. (I recall an earlier shareholder lawsuit against Lyondell’s board stating that they didn’t do enough to hold out for more. There’s no satisfying some shareholders. I suspect that when Access’s $48-per-share offer came in, the reaction in the Lyondell boardroom was probably something like the locker room of a ball club that has just clinched the World Series.) The LyondellBasell bankruptcy also saw a series of dollar short/day late bids from Reliance Industries. Only a bus full of mall walkers browses without buying more than that Indian conglomerate does.

Author: Alex Tullo

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