Lyondell to Acquire Occidental's 29.5% Stake in Equistar; Occidental to Acquire Equity Position in Lyondell
    -  Positions Lyondell for significant additional cash flow as
       petrochemical cycle recovers.
    -  Strengthens Lyondell's balance sheet.

HOUSTON, Jan. 31 /PRNewswire-FirstCall/ -- Lyondell Chemical Company (NYSE: LYO) today announced that it has agreed in principle with Occidental Petroleum Corporation (NYSE: OXY) to acquire Occidental's 29.5% share of Equistar Chemicals, LP. Occidental will purchase an equity investment position in Lyondell, the cash proceeds from which Lyondell will use to fund the purchase of Occidental's stake in Equistar. This would bring Lyondell's ownership interest in Equistar to 70.5%. Millennium Chemicals Inc. holds the remaining 29.5% interest.

"These transactions are cash flow driven," said Dan F. Smith, Lyondell's President and Chief Executive Officer. "The structure allows Lyondell to conserve cash at the trough of the chemical cycle while significantly increasing our proportionate share of Equistar's cash distributions as the chemical cycle improves. We believe this will accelerate Lyondell's debt repayment capability and enables us to improve our balance sheet immediately."

    Occidental will receive the following for its investment in Lyondell:
     --   30 to 34 million shares of newly issued Series B Common Stock, with
          the final number to be determined at closing of the transaction.
          These shares will have the same rights as Lyondell's regular Common
          Stock with the exception of the dividend.  The Series B Common Stock
          will pay a dividend at the same rate as the regular Common Stock
          but, at Lyondell's option, the dividend may be paid in additional
          shares of Series B (payment in kind) or in cash.  These new Series B
          shares also include provisions for conversion to regular Common
          Stock three years after issuance or earlier in certain
          circumstances.  As of year-end 2001, Lyondell had approximately
          118 million shares of common stock outstanding.
     --   Five-year warrants to acquire five million shares of Lyondell
          regular Common Stock at $25 per share.
     --   A contingent payment equivalent in value to 7.38 percent of
          Equistar's cash distributions for 2002 and 2003 up to a total of
          $35 million, payable in cash or Lyondell common stock, as determined
          by Lyondell.
     --   Two Occidental executives, Dr. Ray R. Irani, Chairman and Chief
          Executive Officer, and Stephen I. Chazen, Chief Financial Officer
          and Executive Vice President, will become members of the Lyondell
          Board of Directors.

With the chemical industry currently in the trough of the business cycle, the acquisition will be cash flow neutral and will not be initially accretive to Lyondell earnings. However, due to Equistar's significant earnings leverage, the transaction is expected to become cash flow and earnings accretive at a very early stage in the recovery of the chemical cycle.

"On a normalized Equistar earnings level, which we believe to be approximately $1 billion of EBITDA per year, we believe this transaction will add significant value for Lyondell shareholders and bondholders," Smith said. "In addition, we welcome the participation of Occidental as an investor and as part of our Board."

Under terms of the agreements that govern the Equistar partnership, Millennium will have the right to participate in the acquisition of Occidental's portion of Equistar on a ratable basis, if it elects to do so.

Since the basic structure of the Equistar governance agreement does not change, Lyondell will continue to account for its investment in the Equistar joint venture under the equity method of accounting.

Equistar Chemicals, LP was formed in December 1997 with the combination of the olefins and polymers businesses of Lyondell and Millennium. Occidental joined the partnership in May 1998 with the contribution of the ethylene, propylene, ethylene oxide and derivatives businesses of Occidental Chemical Corporation, a subsidiary of Occidental Petroleum. The venture has achieved significant cost savings since its formation and has become one of the largest and most efficient commodity chemical producers in North America. Dan Smith, Lyondell's President and CEO, also serves as Chief Executive Officer of Equistar.

Closing of the transactions is subject to completion and execution of definitive documentation, approval by the Boards of Directors of Lyondell and Occidental, approval by Lyondell stockholders and other customary conditions.

Lyondell will discuss these transactions during a previously scheduled teleconference on January 31 at 11:00 am Eastern Time. The dial-in number is 952-556-2802. Simultaneous Internet broadcast is on .

Lyondell Chemical Company, ( ), headquartered in Houston, Texas, is the world's largest producer of propylene oxide (PO); the world's number three supplier of TDI (toluene diisocyanate); a leading producer of propylene glycol; a leading producer of other PO derivatives such as BDO (butanediol) and PGE (propylene glycol ether); and a producer of styrene monomer and MTBE as co-products of PO production. Equistar Chemicals, LP, a joint venture in which Lyondell currently owns a 41% interest, is one of the largest producers of ethylene, propylene and polyethylene in North America and a leading producer of polypropylene, ethylene oxide, ethylene glycol, high value-added specialty polymers and polymeric powder. Through its 58.75% interest in LYONDELL-CITGO Refining LP, Lyondell is one of the largest refiners in the United States, processing extra heavy Venezuelan crude oil to produce gasoline, low sulfur diesel and jet fuel. Lyondell is the third largest methanol producer in the U.S., through its 75% interest in Lyondell Methanol Company, L.P.

The statements in this release relating to matters that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to, future global economic conditions, availability of capital markets, industry production capacity and operating rates, the supply/demand balance for Lyondell's and its joint ventures' products, competitive products and pricing pressures, increases in raw material and/or energy costs, changes in governmental regulations and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to Lyondell's Annual Report on Form 10-K for the year ended December 31, 2000, Lyondell's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001, and the proxy statement that Lyondell will file with the Securities and Exchange Commission with respect to its 2002 Annual Meeting of Shareholders.

SOURCE Lyondell Chemical Company
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CONTACT: media, Jackie Wilson, +1-713-652-4596, or Anne M. Knisely, +1-713-309-2643, or investors, Patrick Quarles, +1-713-309-7141, all of Lyondell Chemical Company

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