LyondellBasell Industries, the world's third-largest independent chemical company, said Wednesday that bankruptcy protection is an option as a broadening recession cuts demand for its products.
"We are looking to restructure our debt, and we are looking at all of our options," company spokeswoman Susan Moore said in an interview. "Filing for (bankrupcty) protection is one of those options."
The privately held company has brought in outside advisers, Moore said.
The LyondellBasell announcement arrived just two days after the collapse of a $17.4 billion joint venture between Dow Chemical and Kuwait's Petrochemical Industries Co.
The industry has been hit by slumping demand and volatile energy prices in 2008, which have scuttled one major buyout and has put another, involving Dow, at risk.
Earlier this month the company said in a filing with the Securities and Exchange Commission that several lenders have allowed it to postpone $160 million in loan payments.
Standard & Poor's Ratings Services downgraded the company's long-term corporate credit rating to junk status and Moody's lowered LyondellBasell's corporate family rating to "Caa2," its fourth-worst junk rating.
S&P said a restructuring of the company's debt could lead to "substantial principal losses for some creditors, especially nonsenior lenders, which will be tantamount to a default under our criteria and definition."
LyondellBasell denied that it had defaulted on any debt.
LyondellBasell Industries AF was formed in 2007 when Dutch chemical company Basell International Holdings paid $12.7 billion for Houston-based Lyondell Chemical.
The deal was struck just as crude oil began its rapid ascent to nearly $150 per barrel over the summer, prices that squeezed margins for all chemical makers.
But a broadening recession slashed demand both for the products the industry makes and the energy prices that led to a consolidation in the industry in the first place.
Chemical companies have scrambled to undue major deals and cut costs.
Hexion Specialty Chemicals Inc. walked away from a $6.5 billion buyout of Salt Lake City-based Huntsman Corp. in June. The dispute was settled privately earlier this month, putting aside a string of lawsuits.
Midland, Michigan-based Dow Chemical laid off 5,000 workers and closed 20 plants in December.
When Kuwait's Petrochemical Industries called if its joint venture with Dow Chemical late Sunday, it threw Dow's pending $15.3 billion acquisition of Philadelphia-based rival Rohm & Haas Co. into doubt.
Dow may be forced to draw down a $13 billion bride loan to pay for the entire acquisition with the money expected from the joint venture now apparently gone.
Dow's credit rating has also taken a hit.
Wilmington, Delaware-based DuPont Co. let 2,500 workers go in December and released 4,000 contractors. DuPont spokeswoman Lori Captain said Wednesday that the company remains financially strong and that LyondellBasell is not a significant customer, supplier or competitor.
Even in the context of a global economic downturn, volatility in the chemical sector and the end of the year stands out.
"The year marched in like a lamb, and we're obviously exiting being buffeted by very depressing economic activity," said Frank Mitsch, an analyst with BB&T Capital Markets.
Deals that were completed came with some baggage as well this year.
Ashland Inc., which makes Valvoline took on $700 million in debt when it bought Hercules Inc. in November. After the buyout, the Covington, Kentucky-based company had to cut its dividend by 73 percent to conserve cash.
LyondellBasell has annual sales of $54.6 billion and more then 16,000 employees worldwide, according to its Web site.