Netherlands-based LyondellBasell Industries (LBI) today said it has got creditor support for a reorganisation plan, under which around $18 billion debt will be converted into common equity.
The company also filed a motion in the bankruptcy court to approve an Equity Commitment Agreement it entered into on December 11. According to the plan, an aggregate of $2.8 billion will be raised through the purchase of equity as soon as it emerges from the bankruptcy restructuring.
The creditor support for its plan may prompt Mukesh Ambani’s Reliance Industries (RIL) to re-think its strategy on takeover of LBI. RIL had, in November, made a preliminary, non-binding offer of $10-12 billion for a major stake in LBI.
The lender litigation settlement remains subject to court approval. "Approval of the lender litigation settlement will help pave the way to LyondellBasell's emergence from Chapter 11 (bankruptcy-spurred restructuring). The plan and disclosure statement have been revised to implement the lender litigation settlement,” the company said in a statement.
A group consisting of Apollo Management, an affiliate of Access Industries, and Ares Corporate Opportunities Fund has agreed to back-stop the equity rights offering. The rights offering will not commence until the company's disclosure statement has been approved by the bankruptcy court.
LBI said the plan support agreement represents an important and significant step toward obtaining a consensual reorganisation for LyondellBasell.
The company's creditors have, among other things, sought liens and guarantees of $300 million to be shared among general unsecured creditors of relevant debtors and the setting up of a litigation trust to pursue certain claims against parties other than the lenders.
LBI was formed in December 2007 by the acquisition of Lyondell Chemical Company (the third-largest independent, US-based chemicals company, headquartered in Houston, Texas) by Basell Polyolefins for $12.7 billion.
