Lyondell amends plan treatment, still considering Reliance proposal

By Caroline Salls

Pittsburgh, Dec. 14 - Lyondell Chemical Co. filed an amended plan of reorganization and related disclosure statement Friday with the U.S. Bankruptcy Court for the Southern District of New York that changes the treatment for holders of debtor-in-possession roll-up claims, bridge loan claims, general unsecured claims against obligor debtors and general unsecured claims against non-obligor debtors.

Holders of DIP roll-up claims were previously scheduled to recover 100% either through their share of new notes or cash.

Under the amended plan, these creditors will recover 100% in new third-lien notes, provided, however, that if this class votes to reject the plan, claimants who voted to accept it will receive new third-lien notes and claimants who voted to reject it will receive cram down notes.

Also under the amended plan, holders of bridge loan claims will receive a share of new common stock and new warrants, versus new common stock, rights to participate in a rights offering and a claim against some debtors.

Holders of general unsecured claims against the obligor debtors will receive a share of cash equal to $300 million minus cash distributed to holders of notes claims as if the claims were included in the general unsecured class, as well as warrants.

These creditors were previously slated to receive a share of any litigation reserved common stock and a share of the company's litigation trust.

Holders of general unsecured claims against non-obligor debtors will receive a share of cash equal to the net value of the applicable debtor after priority claims have been paid, compared with a share of new common stock under the original plan.

Rights offering

As previously reported, the reorganized company will sell up to $2.55 billion of new class B common stock at a price of $10.61 per share under a rights offering, reduced from $3 billion under the original plan.

An additional $250 million of the shares will be offered as backstop consideration to Apollo Management VII LP affiliate LeverageSource Delaware, LLC, Access Industries affiliate AI LBI Investment LLC and Ares Corporate Opportunities Fund III, LP.

According to the amended disclosure statement, the company is still evaluating an unsolicited preliminary non-binding offer it received from Reliance Industries Ltd. in November to acquire a controlling interest in the reorganized debtors.

If it decides to move forward with this transaction, Lyondell said it would not need to pay any break-up fee to the rights offering sponsors.

Plan creditor treatment

Treatment of creditors will include:

• Holders of administrative expense claims, DIP new money claims and ABL claims, priority tax claims and priority non-tax claims will recover 100% in cash;

• Holders of secured tax claims will recover 100% either in cash or through retaining their liens on the claims;

• Holders of DIP roll-up claims will recover 100% through new third-lien notes or cram down notes, depending on whether the class votes to accept or reject the plan;

• Holders of senior secured claims will receive a share of the new common stock in the reorganized company, their rights to purchase rights offering new common stock and deficiency claims against all obligor debtors and an allowed $8.96 billion claim against specified debtors;

• Holders of bridge loan claims will receive a share of the new common stock in the reorganized company and new warrants;

• Holders of other secured claims will recover 100% either through reinstatement of their claims, through payment in the ordinary course of business or through the transfer of the collateral securing the claims;

• Holders of general unsecured claims against the obligor debtors will receive a share of cash and warrants;

• Holders of general unsecured claims against the non-obligor debtors will receive a share of cash equal to the net value of the applicable debtor;

• Holders of general unsecured claims against schedule III debtors will receive a share of disbursement trust beneficial interests, based on the resolution of committee litigation;

• Holders of notes claims will receive the same treatment as holders of general unsecured claims against obligor debtors. However, to the extent that any holder of a 2015 notes claim receives or is entitled to receive property pursuant to the plan, that property will be turned over to the senior secured lenders and bridge lenders under an intercreditor agreement;

• Holders of securities claims, subordinated claims, equity interests in LyondellBasell Finance Co., equity interests in LyondellBasell Industries and equity interests in schedule III debtors will receive no distribution; and

• Equity interests in other debtors will either continue to be held by the applicable debtor, will be cancelled in exchange for new equity or will be transferred under the plan.

Lyondell is a U.S. subsidiary of LyondellBasell Industries AF SCA, 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, 2009. The Chapter 11 case number is 09-10023.

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