It's been brutal for the chemicals industry. Dow Chemical (NYSE: DOW), for example, lost a multi-billion dollar joint venture deal with Kuwait. Then there was the implosion of the Huntsman (NYSE: HUN) buyout, which singed private equity operator, Apollo Management LP.
Now, there's another victim: Lyondell Chemical. The company, which is part of the LyondellBasell Industries AF empire, filed for bankruptcy.
Lyondell Chemical, a maker of polymers and petrochemicals, couldn't manage the price deflation as well as harsh materials costs. Although, the main problem was a $12.7 billion merger in 2007, which resulted in large amounts of debt.
Now, Lyondell is seeking $8 billion in bankruptcy financing.
Interestingly enough, it looks like Apollo is part of the group that wants to lend money to the struggling chemicals company (this is according to a piece in Bloomberg.com).
The firm also invested in Lyondell's junk bonds. In fact, other private equity firms invested in the debt too, such as TPG and Blackstone Group LP (NYSE: BX).
It's not clear whether the funds made any money on these transactions. Then again, it highlights how private equity firms are trying to find new ways to make money from the distressed environment – especially since buyouts have dried up.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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