MUMBAI/NEW YORK (Reuters) - LyondellBasell ACCEIN.UL filed a restructuring plan on Monday, rejecting a takeover bid from India's Reliance Industries RELI.BO that valued the bankrupt petrochemicals firm at $14.5 billion.
As part of its reorganization plan, submitted to a U.S. bankruptcy court, Lyondell will sell 263.9 million Class B shares, mostly through a rights offering backed by private equity firms Apollo Management, Ares Management and Access.
Lyondell will seek to list its shares on the New York Stock Exchange once the reorganization plan becomes effective.
Apollo can invest up to $1.52 billion, while Ares can invest up to $475.7 million and Access can invest up to $805.9 million, the court documents show.
Apollo will have the right to nominate three initial supervisory board members, while Access and Ares will have the right to nominate one initial supervisory board member, the filing showed.
Reliance, controlled by billionaire Mukesh Ambani, raised its bid for Lyondell twice after making its first offer in November, sources have said.
But Reliance's chances for success were clouded by the prospect that senior Lyondell creditors such as Apollo Management APOLO.UL might take a loss at the price Reliance proposed and could gain more from an independent Lyondell.
Reliance’s escalating bids raised worry among investors that India’s largest listed conglomerate, with interests in petrochemicals, refining, oil and gas and retail, might overpay.
Reliance’s offer was not sufficiently valuable to abandon the reorganization plan, Lyondell said in its filing.
A deal would have raised Reliance's presence in major markets such as the United States and Europe and catapulted it into the ranks of top global chemicals makers such as Saudi Arabia's SABIC 2010.SE, Germany's BASF BASF.DE and Dow Chemical Co DOW.N.
“It’s not like Reliance was getting Lyondell for cheap. So at the last price the company offered, we don’t think it would have been a very good deal, even in the long term,” said Rajen Shah, chief investment officer at Angel Group in Mumbai.
“The rejection is actually a positive for Reliance,” he said.
If the court approves Lyondell’s restructuring plan, it will be sent to the company’s creditors for approval. A court hearing on the plan was scheduled for March 11, the filing said.
Lyondell filed for Chapter 11 bankruptcy protection in January 2009, unable to meet its debt obligations after it was hit by waning demand for petrochemicals products in the global economic downturn.
Lyondell is controlled by investor Len Blavatnik through New York-based Access Industries. It took on billions of dollars of debt when Access Industries led a 2007 buyout.
The case is In re: Lyondell Chemical Co, U.S. Bankruptcy Court, Southern District of New York, No. 09-10023.
OTHER OPTIONS FOR RELIANCE
Reliance, for its part, has made no secret of its overseas ambitions and has raised a war chest for potential deals by selling $2 billion in stock in recent months.
Lyondell’s rejection could mean Reliance will look at other overseas options.
“Just because this deal didn’t happen doesn’t mean Reliance will stop looking,” Shah said.
Reliance made a $2 billion offer for private Canadian oil-sands firm Value Creation Inc, according to media reports, although three people familiar with Reliance’s thinking have said the Calgary, Alberta-based firm may not be an ideal target.
Other possible targets include assets owned by U.S.-based Valero Energy VLO.N and Sunoco SUN.N, energy assets belonging to ConocoPhillips COP.N and Devon Energy DVN.N, and refineries in Europe that are up for sale, bankers have said.
Analysts say exploration and production assets will be a better fit for Reliance, since this will help feed its refining complex -- the largest in the world -- situated in western India.
Additional reporting by Sakthi Prasad in Bangalore; editing by Malini Menon and John Wallace
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