* Offer raises Lyondell's valuation from $12 bln - source
* Under offer, Reliance to buy $2.2 bln in new Lyondell stock
* Reliance sent Lyondell higher offer in late Dec - sources
* WSJ says Lyondell board rejects latest Reliance offer
* Reliance has until sometime in Feb for another offer-WSJ (Updates with changes to sourcing; adds background, share price)
By Emily Chasan and Pratish Narayanan
NEW YORK/MUMBAI, Jan 8 (Reuters) - India's Reliance Industries Ltd (RELI.BO) has sweetened its offer to buy a controlling stake in LyondellBasell Industries [ACCEIN.UL] that values the bankrupt chemicals firm at $13.5 billion, a source familiar with the situation told Reuters.
But Lyondell's board has rejected Reliance's sweetened offer, said the Wall Street Journal, which first reported the raised offer. Reliance now probably has until sometime in February to make another offer, the paper said, citing people familiar with the matter.
A restructuring plan proposed by Lyondell that would keep the company independent would, by comparison, value it at about $15.5 billion, the Wall Street Journal said.
Lyondell's senior creditors are running the bankruptcy process.
Lyondell filed for bankruptcy protection last January after being unable to meet its debt obligations when demand dropped for petrochemical products during the global economic downturn.
Two people familiar with the matter told Reuters that Reliance, India's biggest conglomerate, controlled by billionaire Mukesh Ambani, had sent Lyondell a letter in late December with the raised offer.
The new offer compares with Reliance's initial bid in November, which valued Lyondell at $12 billion, said the source, who was not authorised to speak to the media and thus did not want to be identified.
Reliance has interests in petrochemicals, refining, oil and gas exploration and retail, and a deal with Lyondell would catapult it into the ranks of top petrochemical makers such as Saudi Arabia's SABIC 2010.SE, Germany's BASF BASF.DE and U.S.-based Dow Chemical Co (DOW.N).
As per the new proposal, Reliance would purchase about $2.2 billion in new stock and support a separate $2.8 billion rights offering by Lyondell to take the company out of bankruptcy, the source said.
It would also seek voting control to implement synergies with Reliance even if it only holds a minority stake, the source said.
Reliance declined to comment in Mumbai. Lyondell also declined to comment on its discussions with Reliance, saying it is bound by a confidentiality agreement.
"Our focus is at this point on having our disclosure statement approved by the court," Lyondell spokesman David Harpole said, noting its current reorganisation plan which would have existing senior creditors take control of the company after its emergence from bankruptcy.
Earlier this week, Reliance Industries raised $577 million through a share sale, its second big equity fund-raising in under four months, which was seen as part of its efforts to buy Lyondell. [ID:nSGE60304C]
Lyondell's current deal with creditors led by investors Ares Management, Apollo Management [APOL.UL] and billionaire Len Blavatnik's Access Industries, does not prohibit the company from considering other "bona fide offers," Harpole said.
At 0410 GMT on Friday, shares in Reliance were down 0.6 percent at 1,099 rupees in a Mumbai market .BSESN down 0.1 percent.
Lyondell's official committee of unsecured creditors has said in court filings that it is encouraging the company to look at Reliance's earlier offer.
But Reliance's earlier proposal may be inadequate to win over senior creditors, who may incur a hefty loss under terms of the $12 billion offer and would gain more from an independent Lyondell, analysts have said. [ID:nN1664551]
Luxembourg-based LyondellBasell was created after a 2007 buyout led by Blavatnik through New York-based Access.
The case is In re: Lyondell Chemical Co, U.S. Bankruptcy Court, Southern District of New York, No. 09-10023. (Additional reporting by Indulal P.M. in MUMBAI; Editing by Muralikumar Anantharaman)