No immediate impact on RIL from LyondellBasell offer: Fitch
23 November 2009
Fitch Ratings today said that there is no immediate impact on Reliance Industries Limited's (RIL, 'BBB-'/Stable, 'AAA(ind)'/Stable) ratings following the company's announcement that it has made a preliminary non-binding cash offer to acquire a controlling interest in LyondellBasell Industries upon the latter's emergence from Chapter 11 reorganization.
According to RIL, the offer is subject to customary conditions including conduct of due diligence, documentation and receipt of sufficient creditor support. Fitch will await developments on all these issues, on regulatory approvals and on the transaction structure before taking any rating action. This preliminary offer might not necessarily result in a transaction.
Headquartered in The Netherlands, LyondellBasell was created through the December 2007 merger of Basell Polyolefins and Lyondell Chemical Company. It recorded revenues of $50.7 billion in 2008.
LyondellBasell voluntarily filed to reorganise its US operations and one of its European holding companies under Chapter 11 of the US Bankruptcy Code in January 2009 in order to restructure its debts. As per LyondellBasell's management, during the last two quarters of 2008, there was a significant softening in demand for products and volatility in raw materials costs. Pursuant to this, they made the decision to file Chapter 11 to get the time and resources necessary to facilitate restructuring.
RIL has gone through significant operational developments since September 2008. Its two key projects commenced operations on which considerable investments were made since the financial year ended March 2006 - a new refinery and development of the KGD6 upstream block. These have started contributing to RIL's revenues and EBITDA in a major way from FY10. RIL is now looking at new growth opportunities.
RIL is primarily an oil refining and petrochemicals company which is gradually expanding its operations upstream into exploration and production. RIL's refining capacity is 1.24 million barrels per day. LyondellBasell Industries is one of the world's largest polymers, petrochemicals and fuels companies. LyondellBasell is privately owned by ProChemie GmbH, a joint venture of Access Industries and ProChemie Holding Ltd.