Lyondell reduces B loan size to $500 million, sets discount at 99

By Sara Rosenberg

New York, March 23 - Lyondell Chemical Co. downsized its six-year senior secured term loan B (Ba3) to $500 million from $1 billion and set the original issue discount at 99, according to a market source.

Pricing on the term loan B was left unchanged at Libor plus 425 basis points with a 2% Libor floor.

In addition, the financial covenants were eliminated from the term loan B structure. Originally, the loan was going to include a maximum first-lien leverage ratio and a minimum interest coverage ratio.

Commitments towards the term loan B are due on Wednesday at 4 p.m. ET.

UBS, Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, JPMorgan, Morgan Stanley and Wells Fargo are the joint bookrunners on the term loan B, with UBS the left lead.

Security for the term loan B following the company's emergence from bankruptcy will be a first-priority lien on substantially all of the issuer's and each subsidiary guarantors' existing future property and assets other than the assets securing the U.S. ABL revolver, 100% of the capital stock of each U.S. subsidiary, 65% of the capital stock of LyondellBasell Subholdings BV and a second-priority lien on the assets that secure the U.S. ABL revolver.

Lyondell's $2.25 billion credit facility still includes a $1.75 billion ABL revolver talked at Libor plus 375 bps with a 2% Libor floor.

Citigroup is the left lead on the ABL revolver.

Proceeds from the credit facility, new senior secured notes, a new European securitization facility and a $2.8 billion rights offering will be used to repay and replace existing debt, including the company's debtor-in-possession facilities and an existing European securitization facility and to make related payments, when the company exits bankruptcy.

Talk is that the term loan B was downsized because the company opted for a larger bond deal than the $2.25 billion that was originally proposed.

Lyondell is a U.S. subsidiary of LyondellBasell Industries AF SCA, a Netherlands-based polymer, petrochemicals and fuels company.

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