* Offer reportedly worth $10 bln-$12 bln
* Helps Reliance expand globally
* Reliance has firepower to fund deal-analysts
(Recasts, adds creditor comment, dateline, byline, contributor
tag, background; updates stock price)
By Pratish Narayanan and Ernest Scheyder
MUMBAI/NEW YORK, Nov 23 Reliance Industries'
(RELI.BO) offer for LyondellBasell Industries [ACCEIN.UL] is a
serious one and should be closely considered by the bankrupt
petrochemicals maker, a lawyer representing unsecured creditors
The Indian energy company made a cash offer for Lyondell
reportedly worth $10 billion to $12 billion over the weekend.
Since filing for bankruptcy protection last January,
LyondellBasell has been trying to reorganize its operations and
also assuage unsecured creditors, who are suing the banks and
other creditors who put together the company's 2007 leveraged
buyout in a trial slated to start next month.
"The (creditors') committee believes that Reliance's
reported interest is at a level sufficient to warrant very
serious consideration from the debtor," said Ed Weisfelner, an
attorney at Brown Rudnick who represents unsecured creditors.
Lyondell's current bankruptcy plan involves converting debt
to equity and raising funds to exit bankruptcy protection, but
the creditors' litigation could potentially derail that.
LyondellBasell said it would consider the Reliance offer as
a "potential alternative" to maximize investor return.
A cash offer could ease the way for the company to exit
bankruptcy, even if the litigation continues afterward.
Lyondell needs a way out of bankruptcy as its
debtor-in-possession funding is set to mature in early 2010.
However, the company said it would focus on resolving its
creditors' disputes before altering its reorganization plan.
Lyondell filed for Chapter 11 protection largely due to the
debt amassed as part of Basell's buyout of Lyondell in 2007.
That deal, led by billionaire Len Blavatnik's Access
Industries, was worth about $12.7 billion, just above
Reliance's reported offer.
If Reliance is successful, it would gain greater access to
the 19 countries where Lyondell currently operates and
instantly make it one of the world's largest chemical makers.
Luxembourg-based LyondellBasell filed for bankruptcy after
it was unable to meet its debt obligation as the recession cut
demand for petrochemicals.
Reliance has been looking to take advantage of low
valuations to expand internationally and analysts said the
company has enough firepower to finance the deal.
It has $4 billion of cash, $8 billion of treasury stock,
and if it doubled its current net debt-to-equity, it could
borrow another $10 billion, Macquarie Research said in a note
ahead of the bid.
The proposed deal would also give Reliance greater
bargaining power in sourcing, and technology patents, analysts
LyondellBasell generates about 34 percent of its revenue
from fuels, 30 percent from chemicals and 35 percent from
The petrochemical company has $27.1 billion of assets and
$19.3 billion of debt, according to its bankruptcy filing.
The American Chemistry Council -- the chemical industry's
trade group -- BASF and Dow Chemical declined to discuss
Reliance's offer. DuPont could not immediately be reached for
Bank of America (BAC.N) is among the advisers for Reliance,
sources told Reuters.
Shares of Reliance Industries rose 3.3 percent in Mumbai
trading on Monday.
(Additional reporting by Emily Chasan in New York; Aaron
Gray-Block in Amsterdam; Narayanan Somasundaram, Ami Shah and
Devidutta Tripathy in Mumbai; Editing by John Mair, Jean Yoon
and Steve Orlofsky)
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