The new offer will include cash and stock options for shareholders and creditors.
Mukesh Ambani-promoted Reliance Industries may spring a surprise in the tussle to take control of LyondellBasell, by raising its offer for the Dutch company at the last moment. Today would be the deadline for a revised proposal.
Sources at RIL said the company was still working on its offer and may hike it marginally after taking into account the latest development. The earlier RIL offer had valued the bankrupt petrochemicals maker at about $13.5 billion. The new offer would include cash and stock options for shareholders and creditors.
On Tuesday, LyondellBasell's unsecured creditors had agreed to settle the dispute over their claims and decided to support the reorganisation plan of the present management. The management offered an additional $150 million towards the claims of unsecured creditors, for settling the dispute.
The unsecured creditors, who had part-funded Basell in a leveraged buyout of the US-based Lyondell in 2007, were supporting the entry of potential investors such as RIL to rescue it. Unsecured creditors, including bond holders, are estimated to hold around $3 billion of debt in the company.
The reorganisation plan of Lyondell’s management offered to convert $18 billion debt of secured and unsecured creditors, including bridge loans, into equity. Moreover, the existing promoters will subscribe to the $3-billion rights issue of the company to continue management control. After implementing the plan, the chemical giant would value around $21 billion, said analysts.
Once Lyondell emerges out of Chapter 11 (a legal provision where a company gets breathing space to restructure itself as an alternative to formal bankruptcy) ain the US, RIL would prefer to have a controlling stake in the company by buying out a part of the shareholders’ equity and subsequently subscribing to fresh shares. It had been building a financial war chest in the past six months by selling its treasury shares, eyeing "global opportunities". While it has a cash reserve of over Rs 9,000 crore through the sale of its treasury stock, it is in a position to raise another Rs 13,000 crore by selling the remaining treasury shares.
A team headed by Ambani’s right hand man, Manoj Modi, had even been sent to negotiate with the management and creditors to thrash out an acquisition plan.
Agencies quoted David Harpole, the spokesperson of LyondellBasell, as saying any alternative to its reorganisation plan needs to be much better and attractive, that maximises the value for creditors. Analysts said RIL would have to quote more than $15 billion to make the bid attractive for Lyondell.