Cost control

To restructure its debts, the US operations of LyondellBasell Industries and one of its European holding companies have voluntarily filed to reorganise under Chapter 11 of the US Bankruptcy Code.

LyondellBasell, one of the world's largest polymers, petrochemicals and fuels companies, also announced that, pending court approval, it has made arrangements for up to $8bn (£5.3bn) in debtor-in-possession (DIP) financing to fund continuing operations.

'During the past two quarters, we have seen a dramatic softening in demand for our products and unprecedented volatility in raw materials costs. December was particularly difficult, as many of our customers postponed orders to reduce their inventories,' said Volker Trautz, chief executive officer.

'During the reorganisation period, our goal is for the company to continue its operations and its relationships with customers and suppliers in the normal course,' said Trautz.

Trautz said that the company began taking steps to control costs as demand began to weaken and raw material costs started to fluctuate.

'Over the past several months, we announced plans to significantly reduce headcount and also reduced capital expenditures and working capital,' he said. 'We have also rendered certain facilities inactive and reduced production and processing at others. We are aggressively exploring additional ways to lower our costs and streamline operations in response to a very difficult global economic environment.'

The Chapter 11 filing applies to LyondellBasell's operations in the US and one of its European holding companies, Basell Germany Holdings. Basell Germany Holdings was included in the Chapter 11 filing, but not as a result of insolvency.

Including the non-US holding company allowed it to benefit from the special financing package that had been negotiated with lenders in connection with the Chapter 11 filing.