UPDATE 2-Lyondell settlement paves way for bankruptcy exit

* Lyondell says it settles creditor lawsuit over buyout

* Unsecured creditors support settlement

* Settlement will pave way for it to exit Chapter 11

* Creditors to get $150 mln additional distributions
(Adds details on hearing date)

By Emily Chasan and Chelsea Emery

NEW YORK, Feb 16 (BestGrowthStock) – LyondellBasell [ACCEIN.UL]
said on Tuesday it reached a settlement with creditors over a
lawsuit stemming from its 2007 leveraged buyout, paving the way
for the chemical maker to get out of bankruptcy.

Lyondell, which was forced into bankruptcy just over a year
ago amid a cash crisis, has been sparring with creditors for
months over a $22 billion lawsuit the creditors brought against
the banks, advisers and executives who put together Lyondell’s
leveraged buyout by Basell in 2007.

The creditors claimed the buyout set the company up to fail
by loading it up with too much debt, and disputed the validity
of a $300 million settlement agreement of the lawsuit that
Lyondell said it reached in December.

Lyondell said on Tuesday it now has support from unsecured
creditors for a $450 million settlement that will let it come
up with a reorganization plan and emerge from Chapter 11.

“The parties have worked very hard over the last several
weeks. We believe this provides a clear path to emergence from
Chapter 11,” George Davis, an attorney at Cadwalader,
Wickersham & Taft representing Lyondell, said in U.S.
bankruptcy court in Manhattan on Tuesday.

He said that the company’s balance sheet problems and
“intercreditor disputes” had “stood in the way of emergence.”

The settlement is subject to court approval but would
entitle the company’s general unsecured creditors and holders
of its “Millennium Bonds” and 2015 notes to a $450 million
distribution when the company exits bankruptcy, up from $300
million proposed in the earlier settlement in December.

Lyondell said the additional $150 million will be
distributed as equity in the reorganized company.

The settlement has the support of senior lenders.

Ed Weisfelner, a lawyer with Brown Rudnick, which
represents unsecured creditors, said at the hearing on Tuesday
he hopes the settlement will usher in “a new era of
cooperation” among “previously warring parties.”


Lyondell would like to be able to keep its target of
emerging from bankruptcy protection at the end of April, Davis
told the court on Tuesday.

The maker of petrochemicals has been planning to exit court
protection under a deal that would give ownership of most of
the reorganized company to its secured lenders, including
investment firms Apollo Management [APOLO.UL], Ares Management
and a unit of billionaire Len Blavatnik’s Access Industries.
Access led the 2007 buyout of U.S. chemical company Lyondell,
creating the Luxembourg-based holding company, LyondellBasell.

India’s Reliance Industries (RELI.BO: ) has said it is
interested in purchasing the company and has offered a deal
that would value the company at about $13.5 billion, a source
familiar with the matter said last month. [ID:nSGE607054]

Lyondell said, however, it will continue with its plan.

“We will continue to work with all parties to design a
confirmable plan of reorganization that maximizes the value for
our creditors while improving the financial stability for the
reorganized company,” Lyondell spokesman David Harpole said in
a statement on Tuesday.

“Any alternative plan would require a third party to submit
a definitively higher and better offer that maximizes the value
for our creditors and is in the best interests of our estate.”

The judge scheduled a March 1 hearing to discuss approval
of the settlement but told the court he would also keep March
8 open in his schedule in case parties needed extra time to
reach agreement on any contested portion of the proposals.

LyondellBasell’s CAM facility rose two points immediately
after the company announced its agreement with creditors,
Reuters Loan Pricing Corp reported. [nRLP73366a] The facility
consists of a ratable portion of the company’s eight,
pre-petition credit facilities. The facility is currently 67.5
to 69, RLPC said.

The case is In re: Lyondell Chemical Co, U.S. Bankruptcy
Court, Southern District of New York, No. 09-10023.

Stock Market News

(Editing by Dave Zimmerman and Steve Orlofsky)

UPDATE 2-Lyondell settlement paves way for bankruptcy exit