New York: The US operations of LyondellBasell, the world’s third-largest petrochemical company, filed for bankruptcy protection under the weight of a massive debt load and slumping demand for its products.
The company had taken on billions of dollars in debt obligations a year ago, when billionaire Len Blavatnik led a $12.7 billion leveraged buyout of US firm Lyondell by Basell of the Netherlands.
The New York bankruptcy filing on Tuesday included almost 80 units of the company and encompassed its US operations and a European financing arm. The company’s non-US operations are not included in the Chapter 11 bankruptcy and are continuing to operate as usual.
LyondellBasell Industries, whose products range from fuels to chemicals and plastics, is owned by the Russian- born Blavatnik through New York-based Access Industries and is based in the Netherlands.
The US operations have obtained $8 billion in debtor-in-possession financing to help fund operations, including $750 million from Access Industries.
The privately held company, which operates a massive refining and processing plant in Houston, has suffered from plunging demand for chemicals as industries such as autos, housing and electronics weakened. Tight credit markets have made renegotiating debt difficult.
The company is not alone in its struggles.
“We’re getting back to the kind of scenario that played out earlier this decade when we had five or six defaults per year,” said Kyle Loughlin, analyst with Standard & Poor’s.
Among LyondellBasell’s largest creditors were Venezuelan oil company Petroleos de Venezuela (PDVSA), Algerian energy group Sonatrach, Exxon Mobil Corp and Dow Chemical Co.
LyondellBasell’s lenders include Merrill Lynch, Goldman Sachs Group Inc, Citigroup Inc, ABN AMRO and UBS Securities LLC, according to filings.
LyondellBasell, which employs 17,000 workers and had revenue of $44.7 billion in 2007, has seen its liquidity drop to $639 million currently from $1.67 billion at the end of the third quarter, falling short of its quarterly interest and maintenance costs.
Its products are used in numerous products including fuels, rigid and flexible packaging, plastic pipe, detergents, cosmetics, electronics and appliances.
The bankruptcy filing was made in the US Bankruptcy Court for the Southern District of New York.