LyondellBasell stuck in debt restructuring talks
NEW YORK (Reuters) - Petrochemical giant LyondellBasell ACCEIN.UL remained locked in talks with creditors on Tuesday as it hovered near bankruptcy two days after a deadline to renegotiate terms of its heavy debt load.
The privately held company, the world's third-largest petrochemical maker, has struggled under its debt burden of $26 billion, much of which was taken on during its $12.7 billion leveraged buyout by Dutch-based peer Basell, a unit of Russian-born billionaire Len Blavatnik's Access Industries.
A spokeswoman for LyondellBasell declined to comment on the potential outcome of the ongoing negotiations with creditors, or when they might be completed.
"The negotiations are continuing," said spokeswoman Susan Moore. "They have been making progress."
The company had said on December 31 that it was looking at all options, including a Chapter 11 bankruptcy protection filing.
The steep downturn in demand for chemicals has forced the company and others in the sector to trim operations, and with no upturn in sight, its outlook appears dim.
"You're looking at an industry that is a product of the megaconsolidation-with-leverage era," said Corinne Ball, partner at law firm Jones Day and co-head of the firm's New York restructuring and reorganization practice.
"You now have real balance sheet issues as companies confront the capital crisis and their refinancing needs. There's very little appetite for refinancing at current levels. More than one (chemical industry company) will face similar issues."
LyondellBasell's lenders include Merrill Lynch, Goldman Sachs (GS.N), Citigroup (C.N), ABN AMRO and UBS Securities LLC (UBSN.VX)(UBS.N), according to filings.
Lyondell, which employs 17,000 workers and had pro forma revenue of $44.7 billion in 2007, saw its liquidity drop to about $639 million currently from $1.67 billion at the end of the third quarter -- falling short of its quarterly interest and maintenance costs.
Still, Lyondell has been seeking to restructure its debt payments even as the bond market punished it by sending the notes down to just 4 percent of face value.
Analysts have said assets sales for the company were unlikely to be an attractive option, since it was likely to get only a fraction of the price those assets were valued at only a few months ago, and such a deal might take too long to close.
(Reporting by Matt Daily and Chelsea Emery; Editing by Lisa Von Ahn)
