LyondellBasell liquidity adequate, company uses cash to repay some of DIP revolver

By Jennifer Lanning Drey

Portland, Ore., April 14 - LyondellBasell has adequate liquidity following final approval of its $8 billion debtor-in-possession financing in March and has used cash to repay a portion of the DIP financing's asset-backed loan facility, Alan Bigman, LyondellBasell's chief financial officer, said Tuesday during a company conference call.

The asset-backed facility is being used as a revolving line of credit, he said.

The available capacity under the DIP asset-backed facility is currently limited by LyondellBasell's level of qualifying inventories receivable but has approximately $400 million of additional committed capacity to absorb growth, should working capital increase, Bigman said.

In the first few months of 2009, LyondellBasell's margins have met the company's expectations, largely as a result of cost reduction efforts, Ed Dineen, chief operating officer of LyondellBasell, said during the call.

The company's expectations, however, were admittedly modest, he said.

Although the company has not yet seen a significant change in conditions, a gradual improvement in performance is expected over the coming months, Dineen said.

"Performance should improve as our cost reduction efforts advance, we move past the initial disruptions and uncertainties related to our bankruptcy, benefit from normal seasonal trends and hopefully benefit from some improvement in the economy," he said.

At the time of the merger between Lyondell and Basell, the companies identified $400 million of related savings and benefits. Recently, however, LyondellBasell has intensified its focus around a more aggressive plan to improve results by $1.3 billion.

"This is not just a plan, we are acting aggressively and realizing results," Dineen said.

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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