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LyondellBasell says $400 million covenant cushion may decrease
By Jennifer Lanning Drey
Portland, Ore., June 30 - LyondellBasell maintained a $400 million cushion against its credit facility debt covenants in May but is concerned that the cushion may decrease over time due to continuing economic challenges, Alan Bigman, chief financial officer of LyondellBasell, said during a Tuesday conference call.
LyondellBasell's EBITDAR for May was $203 million, slightly better than April EBITDAR of $188 million.
Bigman said May benefited from stronger polymer technology results, while refining fell short of April results due to the negative impact of unplanned maintenance.
Year-to-date EBITDAR through the end of May was $740 million, still ahead of the company's operating forecast of $713 million.
LyondellBasell had more than $2.4 billion of total liquidity at June 26, relatively steady with total liquidity at the end of May, Bigman said.
The company did not draw on its debtor-in-possession term loan during the period but does use the asset-backed loan portion of the facility to make monthly payments for raw materials, he said.
Assets must turn profit
Also during the call, LyondellBasell chief executive officer Jim Gallogly said he believes the company is at the bottom of an industry cycle that is likely to last through 2010 or longer.
The CEO said he thinks most of LyondellBasell's assets can generate a modest profit at a cyclical bottom, but the company will shut down or eventually sell those assets that do not.
The company also continues to focus on cost controls, he said.
LyondellBasell is a Netherlands-based polymer, petrochemicals and fuels company. Its U.S. operations and one of its European holding companies filed for bankruptcy on Jan. 6, 2009 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 case number is 09-10023.
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