Weaker demand and fluctuating prices
LyondellBasell, a manufacturer of fuels, chemicals and plastics, has cited softening demand and volatility in raw material costs as the reasons behind the struggles.
“December was particularly difficult, as many of our customers postponed orders to reduce their inventories,” said CEO Volker Trautz.
“Though we currently anticipate this situation to be short-term and expect customers to increase their purchasing in 2009, we made the decision to file for Chapter 11 in order to provide the company with the time and resources necessary to facilitate an orderly restructuring and position the business for the long term.”
At present the Chapter 11 reorganisation measures only affect the company’s US operations where it employs approximately 7,800 people in nearly 30 locations, and one European holding company.
The rest of LyondellBasell’s European operations will continue unaffected.
The company’s products are used in a broad range of applications and industries, including transportation, packaging, cosmetics, detergents and electronics.
Fragrance and flavour ingredients are manufactured by a facility in Florida, purchased as Millenium Specialty Chemicals in 2004.
According to the company, the division employs over 190 people and is one of the leading producers of terpene-based aroma ingredients and flavours for the oral care and beverage markets.
Plans to restructure
Under Chapter 11 of the US Bankruptcy Code the company is required to submit reorganization plans that must be accepted by the court and the creditors. If a plan is not filed and accepted within a certain period other interested parties can file plans.
According to Trautz, LyondellBasell has been working on possible reorganization plans that would allow successful future trading.
“We have been working collaboratively with our creditors and our equity holder on financial restructuring that reflects the realities of today’s market environment and positions us for the future,” he said.
In addition, the CEO said the company started taking steps to control costs when demand began to weaken including plans to cut jobs, temporarily closing some facilities and reducing production at others.