LyondellBasell files for Chapter 11 protection

Chief executive officer Volker Trautz blamed “a dramatic softening in demand” for the company’s products and “unprecedented volatility in raw material costs”.

Noting that the Rotterdam-based company has already announced plans to reduce headcount, cut spending and idle plants, Trautz added: “We are aggressively exploring additional ways to lower our costs and streamline operations in response to a very difficult global economic environment.”

The company also announced that, pending bankruptcy court approval, it has made arrangements for up to $8bn in debtor-in-possession financing to fund continuing operations.

Of this total, $3.25bn consists of new funding $3.25bn represents a refinancing of certain obligations under LyondellBasell’s existing senior secured credit facilities, and $1.5bn represents replacement of existing working capital facilities.

“We have been working collaboratively with our creditors and our equity holder on a financial restructuring that reflects the realities of today’s market environment and positions us for the future,” Trautz said in a news release.

The Chapter 11 filing applies to LyondellBasell’s operations in the US and one of its European holding companies, Basell Germany Holdings. The US companies filed for Chapter 11 protection in US Bankruptcy Court in New York.

“Though we currently anticipate this situation to be short-term and expect customers to increase their purchasing in 2009, we made the decision to file Chapter 11 in order to provide the company with the time and resources necessary to facilitate an orderly restructuring and position the business for the long term,” Trautz said.

He added that the company’s goal is “to continue its operations and its relationships with customers and suppliers” during the reorganisation. LyondellBasell employs 16,000 worldwide, including 7,800 in the US.

In the filing, the company listed assets of $33.4bn and liabilities of $29.9bn.

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