LyondellBasell considers bankruptcy: report

The privately-held chemical firm has hired a bankruptcy counsel and may file for Chapter 11 shortly, these people told the Wall Street Journal. The company has also told lenders it is seeking up to $2 billion in bankruptcy financing, the newspaper reported.

The WSJ said LyondellBasell spokeswoman Susan Moore declined to comment on whether the company had reached an agreement with lenders or whether it had hired bankruptcy counsel.

"It's our policy not to comment on rumors," the WSJ quoted her as saying.

Moore and another spokeswoman for the company could not immediately be reached by Reuters.

Chemicals companies have struggled this year from a double-whammy of high commodities prices that sent production costs soaring earlier this year and then more recently from a drop off in demand for chemicals as the global economy has slowed.

Earlier on Tuesday, rating agencies Standard & Poor's and Moody's Investors Service cut their ratings on the company's debt. S&P slashed the company's long-term corporate credit rating multiple notches to 'selective default' from B minus, while Moody's cut the company's rating two notches to Caa2 from B2.

"Our downgrade follows the group's decision to postpone $280 million of payments due under the bridge loan conversion," said Standard & Poor's credit analyst Tobias Mock.

"While this deferral has been made with the lenders' agreement, the obligation was not paid as originally scheduled.

"This is a default in our opinion, according to our definitions and criteria," wrote S&P in a statement.

LyondellBasell said S&P's definition of selected default "should not be misinterpreted to suggest that LyondellBasell is currently in default of its bank agreements."

The company was formed last year when Dutch chemicals company Basell International bought its U.S. competitor, Houston-based Lyondell Chemical Co, in an all-cash $12.7 billion deal.

Basell is part of Access Industries, a privately-held company founded by Russian billionaire Len Blavatnik.

New York-based Access has hired the law firm of Skadden, Arps Slate, Meagher & Flom LLP as bankruptcy adviser. LyondellBasell has hired New York law firm Cadwalader, Wickersham & Taft LLP as bankruptcy counsel, the WSJ said citing people familiar with the matter.

Companies sometimes hire bankruptcy advisers to help arrange restructuring agreements outside of court, thereby avoiding the need to file for Chapter 11 protection.

(Reporting by Elinor Comlay; Editing by Anshuman Daga and Lincoln Feast)