Lyondell gets $100 million in emergency funding to continue operations; interim DIP financing OK'd

By Caroline Salls

Pittsburgh, Jan. 8 - Lyondell Chemical Co. has received interim access a portion of its proposed $8.015 billion in debtor-in-possession financing, as well as court approval of an emergency $100 million loan, according to Thursday filings with the U.S. Bankruptcy Court for the Southern District of New York.

The emergency funding will consist of a promissory note made by Citicorp USA, Inc.

Interest on the emergency funding, which will mature on Jan. 9, will be 10%, plus a fee payable to the DIP facility lenders of 1% of the principal amount of loans made under the emergency facility.

Lyondell said it would not be able to continue its operations without the emergency funding.

As previously reported, the $8.015 billion DIP financing includes $3.25 billion of new term loans; $3.25 billion for refinancing of obligations under the company's existing senior secured credit facilities; and $1.515 billion that replaces existing working capital facilities.

The interim DIP financing includes $2.167 billion of term loan funding, dollar-for-dollar roll ups of senior secured loans and full access to the $1.515 billion asset-based revolving credit facility.

The DIP loans were arranged by Citigroup Global Markets Inc., Goldman Sachs Lending Partners LLC, Merrill Lynch Capital Corp., ABN Amro Bank NV and UBS Securities LLC.

The lenders include Citigroup, Goldman Sachs, Merrill Lynch, UBS, Apollo Lyon Holdings, LP, Farallon, Silver Oak Capital, LLC, a designee of Madeleine LLC, Appaloosa, Silverpoint and funds and accounts managed by Oaktree Capital Management, LP, Oakhill Advisors, LP and Strategic Value Partners, LLC.

Access Lender, LLC, which originally had committed to provide $750 million of the DIP financing, was not listed as a lender on the DIP loan documents filed with the interim order.

Some of Lyondell's secured lenders asked the court to remove Access from DIP loan participation in an objection filed Wednesday.

The ABL facility administrative agent is Citicorp USA, Inc., and the term facility administrative agent has not yet been determined.

The facilities will mature on the earliest of Dec. 15, 2009, the effective date of a plan of reorganization, 30 days after the interim order if no final order has been entered and upon acceleration of the loans.

The new term loans will bear interest at Libor plus 1,000 basis points and the $1.515 billion ABL facility at Libor plus 700 bps. The loans include a 300 bps Libor floor.

Borrowings under the ABL facility will be in minimum amounts of $5 million and multiples of $1 million thereafter.

The DIP financing will be used to help fund Lyondell's operations as it restructures its debt and improves its financial position.

The final DIP financing hearing is scheduled for Feb. 4.

Lyondell is a U.S. subsidiary of LyondellBasell, a Netherlands-based polymer, petrochemicals and fuels company. LyondellBasell's U.S. operations and one of its European holding companies filed for bankruptcy on Jan. 6. The Chapter 11 case number is 09-10023.

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