Chemical Firm LyondellBasell May File Chapter 11

The Netherlands, Jan 2, 2009--The financial crisis continues in the chemical industry as reports have started emerging that LyondellBasell Industries AF may file for bankruptcy protection.

The world’s third largest chemical company reportedly told its lenders on Monday that it is considering filing for Chapter 11 as one of the options as it is suffering on weakening sales.

Even the company’s lenders face significant losses as LyondellBasell Industries plans to restructure debt that financed a $12.7 billion acquisition around a year earlier, according to Standard & Poor’s report on late Tuesday.

The firm has large operations in the U.S., where most companies in every sector are struggling with a cash crunch.

The company was created in 2007 after Basell bought Houston-based Lyondell Chemical Co.

LyondellBasell, a privately held company, was formed in 2007 after Basell International Holdings BV, a Dutch chemical firm, paid $12.7 billion to purchase buy Lyondell Chemical.

“The resulting debt burden is proving too heavy amid a decline in sales,” the Journal reported. The firm has annual sales of about $54 billion and 16,000 employees, according to LyondellBasell Web site.

LyondellBasell has reportedly hired bankruptcy counsel and told lenders it is trying to line up as much as $2 billion in bankruptcy financing.

Large firms in chemical sector are being forced to shut down factories re-evaluate plans.

Early this week, Dow Chemical Co. reported that Kuwait decided to pull out of multibillion-dollar joint venture to produce commodity chemicals.