RIL eyeing stake in Dutch petchem major: Sources

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RIL eyeing stake in Dutch petchem major: Sources

Mukesh Ambani-owned petrochemical behemoth Reliance Industries (RIL) is eyeing to acquire part or whole of LyondellBasell, reports CNBC-TV18 quoting sources.

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Mukesh Ambani-owned petrochemical behemoth Reliance Industries (RIL) is eyeing to acquire part or whole of LyondellBasell, reports CNBC-TV18 quoting sources.

LyondellBasell is a Netherlands-based bankrupt petrochemical company, which is among the world's producer of polymers, petrochemicals and fuels. It has an about USD 27 billion in assets with over USD 19 billion in debt at the time of filing for bankruptcy - the company also had an annual revenue of USD 50.7 billion in 2008. It filed for Chapter 11 bankruptcy protection in January this year and obtained a debtor-in-possesion financing of USD 1.8 billion in February - Merrill Lynch, Citigroup and RBS are among the key lenders to the company. LyondellBasell is expected to come out with a rights issue in October for additional liquidity.

Sources said the acquisition could entail RIL making a cash payment of USD 3.25 billion to its vendors.

Reacting to the report, LyondellBassel said it does not yet know who would be the sponsor for the rights offering. "The rights details would be determined and would be communicated in the next few weeks. The details would be made part of the planned supplement," it said, adding that the rights details would be made known to the bankruptcy court.

RIL, which had on Thursday raised USD 650 million via a sale of treasury stock , declined to comment if the sale was connected to the LyondellBasell transaction.

"The sale of treasury shares is accretive for RIL and is a transaction, which represents only 7.5% of our treasury stock and less than 1% of our equity capital. RIL is committed to growth and creating value for long-term shareholders," it said. "The sale of treasury shares is a clear statement of intent from the management that it is going to make substantial investments to continue its' established track record of value creation. However, as a policy, we will not comment on any speculation on the deployment of these funds."

Read page 2 for CNBC-TV18's Gautam Broker's analysis...