LyondellBasell Files Reorganization Plan

LyondellBasell Industries has formally rejected takeover offers from Reliance Industries and instead is proceeding with its own plan of reorganization.

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 with a bankruptcy court on Monday, March 8, 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 the offer would have given Reliance effective control over Lyondell with only a minority financial interest in the firm.

According to a valuation analysis performed by Evercore Partners, one of Lyondell's financial advisors, the company will be worth between $14.2 billion and $16.2 billion when it emerges from bankruptcy, as slated, 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%.

Lyondell plans to use the proceeds to finance its emergence from bankruptcy. Apollo will be able to appoint three directors to Lyondell's nine-member board, while Ares and Access can each appoint one.