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LyondellBasell Formally Rejects Reliance Offer

by Alexander H. Tullo
March 15, 2010 | A version of this story appeared in Volume 88, Issue 11

LyondellBasell Industries has formally rejected Reliance Industries’ final takeover offer and instead is proceeding with its own plan of reorganization. The plan favors private equity firms whose interest in Lyondell predates Reliance’s. The Indian conglomerate’s most recent offer for a controlling interest in Lyondell was worth $14.5 billion, according to public reports. In its reorganization plan, filed for the bankruptcy court’s consideration on March 15, Lyondell says Reliance’s bid didn’t offer greater value than Lyondell’s creditors expect to get under the company’s reorganization plan. Another drawback was that Reliance could have gained effective control over Lyondell with only a minority financial interest in the firm. Lyondell’s financial advisers say the company will be worth between $14.2 billion and $16.2 billion when it emerges from bankruptcy at the end of April. Under the plan, equity in Lyondell will be divvied up among creditors. In addition, Access Industries, which owned Lyondell before bankruptcy, and the private equity firms Apollo Management and Ares Management have agreed to participate in a rights offering in which they will buy $2.6 billion in Lyondell shares. Apollo will purchase 52% of the shares; Ares, 16%; and Access, 32%. Apollo will be able to appoint three directors to Lyondell’s nine-member board, while Ares and Access can each appoint one.


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