RIL offers to buy Dutch petrochem firm

LyondellBasell’s acquisition could add over $50 billion to its revenues.

Mukesh Ambani-controlled Reliance Industries today made a preliminary offer to acquire in cash a controlling stake in LyondellBasell, the $50.7 billion polymers, petrochemicals and fuels company which is trying to emerge out of bankruptcy proceedings.

“This (non-binding) offer is in addition to the previous non-binding equity financing proposals received by the company and represents a potential alternative to the initial plan of reorganisation previously filed by the company,” the Dutch company said in a press release this evening.

A few minutes later, in a statement, Reliance Industries said: “The offer is preliminary and subject to customary conditions including conduct of due diligence, documentation and receipt of sufficient creditor support.”

At the Reliance Industries annual general meeting earlier this week, Ambani had laid out a growth plan that included overseas acquisition. If the deal goes through, Reliance Industries will enter the league of companies with annual revenues in excess of $75 billion.

The company had recently mobilised around Rs 3,200 crore by selling treasury shares. Its cash reserves were estimated at around Rs 19,421 crore at the end of September. While Reliance Industries has acquired oil assets overseas, it has not made big-ticket marquee acquisitions abroad.

“Reliance Industries is reviewing a number of global opportunities for growth in its core business. This review is ongoing and there can be no assurance of the outcome with respect to any of the opportunities under review, including with respect to LyondellBasell, or that any approach made in connection with such opportunities will result in a transaction,” the company said in today’s statement.

LyondellBasell is privately owned by ProChemie GmbH, a joint venture of Access Industries and ProChemie Holding. In 2008, the company had reported losses of $7.3 billion on revenues of $50.7 billion. At the end of September, its liabilities were estimated at $22.24 billion, while the asset base was $21.63 billion. Long-term debt was of the order of $18.37 billion.

In January, LyondellBasell had voluntarily filed to reorganise its US operations and one of its European holding companies under Chapter 11 of the US Bankruptcy Code to restructure the company’s debts. In April, LyondellBasell’s parent company and its general partner were voluntarily added to the Chapter 11 reorganisation filing to protect them against claims by certain creditors.