Houston, January 7: Chemical giant LyondellBasell Industries’ U.S. unit has filed for bankruptcy, citing a weak demand for its products in the present economic turmoil.
LyondellBasell, the world's third largest petrochemical maker, said it was seeking protection for its U.S. business because of a “dramatic softening in demand” during the past six months as well as “unprecedented volatility in raw materials costs.”
However, the company expressed optimism for the current year, saying that it expects a recovery during 2009.
According to the filing in U.S. Bankruptcy Court in Manhattan, the Houston-based petrochemical maker has assets of $27.1 billion, debt of more than $19.4 billion and more than 25,000 creditors. 79 of the company’s affiliates also will file for court protection, including Basell Finance USA Inc.
Earlier in December, the company had revealed that several lenders let it hold over $160 million in loan payments, and credit agencies brought down its ratings to junk status.
Over the past two quarters, the company has had to deal with fading demand and unpredictable raw materials costs, said Chief Executive Volker Trautz on Tuesday. "December was particularly difficult, as many of our customers postponed orders to reduce their inventories," he said.
The company has also announced job cuts and Trautz said that further cost-cutting steps are on the cards.
LyondellBasell had said on Dec. 31 that it was considering alternatives, including a Chapter 11 filing, to reorganize the debt that financed its merger worth $12.7 billion, a year ago.
Besides LyondellBasell's operations in the United States, the Chapter 11 bankruptcy filing in federal court in New York also covered the Basell Germany Holdings GmbH.
LyondellBasell, owned by American billionaire investor Len Blavatnik, has annual sales of $54.6 billion. The company has a workforce of more then 16,000 employees worldwide, according to its Web site.
The products of the company reach far and wide as they are used in gasoline, plastics, electronics, autos, paints and many other familiar products.
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