India’s private sector energy giant, Reliance Industries Ltd, has announced a cash bid to buy a controlling stake in bankrupt petrochemicals firm LyondellBasell Industries.
“The offer is preliminary and subject to customary conditions including conduct of due diligence, documentation and receipt of sufficient creditor support,” Reliance said in a statement issued on Saturday.
Reliance did not say how much it had offered LyondellBasell, but the Times of India yesterday quoted an unidentified banker as saying the company would have to pay at least US$12 billion.
The amount was equal to the difference between LyondellBasell’s assets and liabilities, the Times report said.
If the deal went through, it would catapult Reliance into the big league of global petrochemical companies, the paper said.
The company, which is owned by industrialist Mukesh Ambani, said it was reviewing opportunities for growth.
“There can be no assurance of the outcome with respect to any of the opportunities under review, including with respect to LyondellBasell,” it said.
Luxembourg-based LyondellBasell filed for bankruptcy protection in the US in January, shielding it from its creditors and giving it time to restructure its businesses.
LyondellBasell confirmed on Saturday that Reliance Industries offered to acquire a controlling interest in the beleaguered chemical company.
LyondellBasell declined to disclose the value of the cash offer.
Reliance’s offer “represents a potential alternative to the initial plan of reorganization,” LyondellBasell said, and it “will continue to work with all parties to design an approach that maximizes value for the company’s creditors.”
The offer is nonbinding and is in addition to other nonbinding equity financing proposals LyondellBasell has received.
LyondellBasell is the world’s third-largest independent chemical company and is controlled by billionaire investor Len Blavatnik. Its products are used in gasoline, plastics, electronics, autos, paints and many other products.
LyondellBasell was formed last year, when Basell International Holdings paid US$12.7 billion for Houston-based Lyondell Chemical, taking on debt just as oil prices skyrocketed, squeezing profit margins at chemical makers.
As oil prices fell in the second half of last year, the recession undercut demand for chemical products, leading several affiliates and subsidiaries of Netherlands-based LyondellBasell to file for bankruptcy protection earlier this year.
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