Simpson Thacher advised UBS Securities LLC as lead arranger and UBS AG, Stamford Branch as administrative agent of a $6.5 billion debtor-in-possession term loan facility for Lyondell Chemical Company in connection with its Chapter 11 bankruptcy proceeding. The DIP term loan facility, together with the $1.54 billion DIP asset-backed revolving facility also obtained by Lyondell, represents the largest debtor-in-possession financing in history. The DIP facilities were approved by the Bankruptcy Court of the Southern District of New York on an interim basis on January 8, 2009 and partially funded on January 9, 2009. The Bankruptcy Court approved the final terms and documentation of the DIP facilities on February 27, 2009, and the DIP facilities closed on March 3, 2009. The DIP term loan facility consists of $3.25 billion of new money term loans and a $3.25 billion “roll-up” of a portion of Lyondell’s existing pre-petition senior secured loans held by new money lenders and certain of their affiliates, which roll-up loans share the superpriority liens of the new money DIP loans on a subordinated basis.
The DIP facilities were approved by the Bankruptcy Court after three days of evidentiary hearings including multiple witnesses and objections from numerous parties. Simpson Thacher represented UBS at the hearings, in which the Bankruptcy Court reached a determination that the DIP financing was in the best interests of the estate, the result of arms length negotiation and represented good faith on behalf of the lenders.
The Simpson Thacher team included Stephan Feder, Bill Sheehan, David Eisenberg, Walt Looney, Christian Struck, Joshua Koenig, Ursula Mackey and Benjamin Wells (Corporate), Kathrine McLendon, Anne Knight and Jason Friedman (Bankruptcy), Linda Martin, Natalie Drucker, Daniel Stujenske, Edward Bauer and David Tejtel (Litigation), Jason Vollbracht (Tax), Mardi Merjian and Julia Rubin (Real Estate), Lori Lesser and Marcela Robledo (IP), Adeeb Fadil and Tim Mulvihill (Environmental), Greg Grogan (Executive Compensation & Employee Benefits) and paralegals Christina Mauricio and Elisabeth Juterbock.