And y'all thought Lyondell is going to be the only spectacular chemical LBO bankruptcy. The list is long and focuses mostly on plastics makers: Ineos, Chemtura and Georgia Gulf. The third-largest producer of polypropylene sealed its fate in 2005 when it bought BP's Innovene unit for $9 billion. Net debt most recently was $9.7 billion, 4.3x more than LTM EBITDA according to CFO John Reece. Of course there is the matter of plummeting EBITDA... Doubt leverage will be there for long time. The company recently amended terms on its maximum leverage covenant to increase it to 5.25x from 4.6x; doubt this will help for more than a quarter or so.
Other companies that levered up and haven't seen benefits from their leverage are Georgia Gulf (GGC) which has been on the verge of filing for who knows how long, and Chemtura (CEM), which caused activist investor Nelson Peltz and his fund Trian to lose boatload of cash over the past several years. Amusingly, it is none other than enfant terrible Jeffrey Gendell that had built up an 11 million share position in CEM as of Sept. 30, probably a day or two before he had to liquidate his fund.
We welcome these new Death Watch participants and wish them success in reaching the top of the DW pile in no time.
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