Lyondell should consider Reliance offer - creditors

By Pratish Narayanan and Ernest Scheyder

MUMBAI/NEW YORK (Reuters) - Reliance Industries' offer for LyondellBasell Industries is a serious one and should be closely considered by the bankrupt petrochemicals maker, a lawyer representing unsecured creditors said.

The Indian energy company made a cash offer for Lyondell reportedly worth $10 billion to $12 billion over the weekend.

Since filing for bankruptcy protection last January, LyondellBasell has been trying to reorganize its operations and also assuage unsecured creditors, who are suing the banks and other creditors who put together the company's 2007 leveraged buyout in a trial slated to start next month.

"The (creditors') committee believes that Reliance's reported interest is at a level sufficient to warrant very serious consideration from the debtor," said Ed Weisfelner, an attorney at Brown Rudnick who represents unsecured creditors.

Lyondell's current bankruptcy plan involves converting debt to equity and raising funds to exit bankruptcy protection, but the creditors' litigation could potentially derail that.

LyondellBasell said it would consider the Reliance offer as a "potential alternative" to maximize investor return.

A cash offer could ease the way for the company to exit bankruptcy, even if the litigation continues afterward. Lyondell needs a way out of bankruptcy as its debtor-in-possession funding is set to mature in early 2010.

However, the company said it would focus on resolving its creditors' disputes before altering its reorganization plan.