Lyondell, Equistar begin tender offers, consent solicitations for seven series of notes

By Angela McDaniels

Tacoma, Wash., Nov. 20 - Lyondell Chemical Co. and its subsidiaries Equistar Chemicals, LP and Equistar Funding Corp. have begun tender offers for $4.01 billion of outstanding notes, according to a news release.

The offer includes Lyondell's $325 million 10½% senior secured notes due 2013, $875 million 8% senior notes due 2014, $900 million 8¼% senior notes due 2016 and $510 million 6 7/8% senior notes due 2017 as well as Equistar and Equistar Funding's $400 million 10 1/8% senior notes due 2008, $600 million 8¾% notes due 2009 and $400 million 10 5/8% senior notes due 2011.

The companies are also soliciting consents to amend the note indentures to eliminate substantially all of the restrictive covenants.

The tender offers and consent solicitations are being held in connection with the proposed acquisition of Lyondell by Basell AF SCA.

The tender offers will expire at 12:01 a.m. ET on Dec. 20, and the consent deadline is 5 p.m. ET on Dec. 5.

Holders who tender must deliver consents and vice versa.

The payout will be determined at 2 p.m. ET on Dec. 5 and will equal the sum of the present value on Dec. 20 of the call price of each note on the next redemption date plus the present value of interest that would accrue through the next redemption date minus accrued interest from the last interest payment date up to but excluding the settlement date.

The discount rate for calculating the present value is based on a fixed spread of 50 basis points over the yield of a reference U.S. Treasury note, which is the 4 7/8% Treasury due May 31, 2008 for the 10½% notes, the 3 7/8% Treasury due Sept. 15, 2010 for the 8% notes, the 4 5/8% Treasury due Aug. 31, 2011 for the 8¼% notes, the 4¾% Treasury due May 31, 2012 for the 6 7/8% notes, the 4 7/8% Treasury due Aug. 31, 2008 for the 10 1/8% notes, the 4½% Treasury due Feb. 15, 2009 for the 8¾% notes and the 4 7/8% Treasury due April 30, 2008 for the 10 5/8% notes.

The payout will include a consent payment of $30.00 for each note tendered by the consent deadline.

In addition, the companies will pay accrued interest up to but excluding the payment date, which will be Dec. 20 for notes tendered by the consent deadline. Lyondell said the payment date for notes tendered after the consent deadline will occur "promptly" after the tender offer expires.

The tender offers and consent solicitations are conditioned on completion of the merger.

Goldman, Sachs & Co. (877 686-5059 or 212 357-0775) and Merrill Lynch & Co. (888 654-8637 or 212 449-4914) are the dealer managers. D.F. King & Co., Inc. (800 290-6429 or 212 269-5550) is the information agent.

Lyondell is a Houston-based chemical manufacturing company. Equistar manufactures chemicals and polymers.

Basell produces polypropylene and advanced polyolefin products and is based in Hoofddorp, the Netherlands.

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