<PAGE>
FILED PURSUANT TO RULE 424(b)(5)
REGISTRATION NO. 333-00601
PROSPECTUS SUPPLEMENT
(To Prospectus Dated February 7, 1996)
$300,000,000 [LOGO OF LYONDELL APPEARS HERE]
LYONDELL PETROCHEMICAL COMPANY
$150,000,000 6.50% NOTES DUE 2006
$150,000,000 7.55% DEBENTURES DUE 2026
The 6.50% Notes Due 2006 (the "Notes") will mature on February 15, 2006 and
the 7.55% Debentures Due 2026 (the "Debentures" and, collectively with the
Notes, the "Securities") of Lyondell Petrochemical Company (the "Company" or
"Lyondell") will mature on February 15, 2026. Interest on the Securities is
payable semi-annually on February 15 and August 15, beginning August 15, 1996.
The Securities may not be redeemed prior to maturity.
The Securities will be represented by one or more Global Securities registered
in the name of the nominee of The Depository Trust Company, which will act as
the Depository. Interests in the Securities represented by Global Securities
will be shown on, and transfers thereof will be effected only through, records
maintained by the Depository and its direct and indirect participants. Except
as described herein, Securities in definitive form will not be issued.
Settlement will be made in immediately available funds. The Global Securities
will trade in the Depository's Same-Day Funds Settlement System until
Maturity, and secondary market trading activity in the Global Securities will
therefore settle in immediately available funds.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT COMPANY(1)(2)
<S> <C> <C> <C>
Per Note............................... 99.762% .650% 99.112%
Total.................................. $149,643,000 $975,000 $148,668,000
Per Debenture ......................... 99.884% .875% 99.009%
Total.................................. $149,826,000 $1,312,500 $148,513,500
</TABLE>
- -------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from February 21, 1996 to date of
delivery.
(2) Before deducting expenses payable by the Company estimated to be
$450,000.
The Securities are offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that delivery of Global Securities representing the
Securities will be made to The Depository Trust Company on or about February
21, 1996.
SALOMON BROTHERS INC
MERRILL LYNCH & CO.
BA SECURITIES, INC.
CHEMICAL SECURITIES INC.
The date of this Prospectus Supplement is February 15, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates herein by reference the following documents filed
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which also have been filed with the Securities and Exchange Commission
(the "Commission") (File No. 1-10145):
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1994.
(b) The Company's Quarterly Reports on Form 10-Q for the quarterly periods
ended March 31, 1995, June 30, 1995 and September 30, 1995.
(c) The Company's Current Reports on Form 8-K dated May 1, 1995 (as amended
by Form 8-K/A dated June 26, 1995, Form 8-K/A dated February 6, 1996
and Form 8-K/A dated February 15, 1996), December 8, 1995 and January
31, 1996.
(d) The Company's Registration Statement on Form 8-A dated December 8,
1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act after the date hereof and prior to the termination of
the offering of the Securities offered hereby (collectively with the documents
referenced above, the "'34 Act Reports") shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS SUPPLEMENT IS DELIVERED, UPON WRITTEN
OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY AND ALL OF THE '34 ACT REPORTS
INCORPORATED HEREIN BY REFERENCE (NOT INCLUDING EXHIBITS TO SUCH REPORTS,
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH
REPORTS) AND ANY OTHER DOCUMENTS SPECIFICALLY IDENTIFIED HEREIN AS INCORPORATED
BY REFERENCE INTO THE REGISTRATION STATEMENT TO WHICH THIS PROSPECTUS
SUPPLEMENT RELATES, OR INTO ANOTHER '34 ACT REPORT OF THE COMPANY. REQUESTS
SHOULD BE ADDRESSED TO: THE COMPANY, 1221 MCKINNEY STREET, SUITE 1600, HOUSTON,
TEXAS, 77002, ATTENTION: ASSISTANT SECRETARY (TELEPHONE: (713) 652-7200).
S-2
<PAGE>
LYONDELL PETROCHEMICAL COMPANY
Lyondell operates in two business segments: petrochemicals and refining. The
petrochemical segment consists of olefins including ethylene, propylene,
butadiene, butylenes and specialty products; polyolefins including
polypropylene and high and low-density polyethylene; aromatics produced at the
Channelview petrochemical complex ("Channelview Complex") including benzene and
toluene; methanol; methyl tertiary butyl ether ("MTBE") and refinery blending
stocks. On May 1, 1995, the Company acquired from Occidental Chemical
Corporation resin production facilities at Victoria and Matagorda, Texas, with
a combined annual production capacity of approximately 1.5 billion pounds of
high-density polyethylene, associated research and development activities and
the rights to the Alathon(R) trademark.
The refining segment consists of refined petroleum products, including
gasoline, heating oil and jet fuel; aromatics produced at the Refinery (defined
below), including benzene, toluene, paraxylene and orthoxylene; lubricants,
including industrial and motor oils; olefins feedstocks and crude oil resales.
On July 1, 1993, the Company and CITGO Petroleum Corporation ("CITGO")
announced the commencement of operations of LYONDELL-CITGO Refining Company
Ltd. ("LCR"), a new entity owned by subsidiaries of the Company and CITGO. LCR
owns and operates the refining business formerly owned by the Company,
including the full-conversion refinery ("Refinery"). LCR is undertaking a major
upgrade project at the Refinery (the "Upgrade Project") to enable the facility
to process substantial additional volumes of very heavy crude oil.
The Upgrade Project is intended to increase the heavy crude oil processing
capability of the Refinery from 130,000 barrels per day of 22 degree API
gravity crude oil to 200,000 barrels per day of 17 degree API gravity crude
oil. The upgrade is not intended to increase the total throughput of the
Refinery, but rather its ability to process heavier, higher margin, crude oils.
The project also includes expansion of the Refinery's reformulated gasoline and
low sulfur diesel production capability. Major components of the upgrade
include new coking, crude distillation and sulfur recovery units. The Upgrade
Project is expected to be operational in early 1997. The cost estimate for the
Upgrade Project, previously estimated at $980 million, is currently undergoing
further study and could be increased. The revised cost estimate will depend
upon a number of factors, including the impact of scheduling decisions. Any
increase is expected to be less than 10%.
On July 1, 1993, LCR entered into a long-term crude oil supply contract
("Crude Supply Contract") with LAGOVEN, S.A., an affiliate of CITGO. In
addition, under terms of a long-term product sales agreement ("Products
Agreement"), CITGO is currently purchasing all of the light refined products
produced at the Refinery. Both LAGOVEN and CITGO are subsidiaries of Petroleos
de Venezuela, S.A., the national oil company of Venezuela.
Prior to completion of the Upgrade Project, the Crude Supply Contract
requires LCR to purchase and LAGOVEN to supply a minimum of 125,000 barrels per
day of heavy Venezuelan crude oil. Upon completion of the Upgrade Project that
minimum is increased to 200,000 barrels per day (allowing for scheduled or
unscheduled downtime). The contract incorporates a formula price based on the
market value of a slate of refined products deemed to be produced from each
particular crude oil or feedstock, less: (i) certain deemed refining costs,
adjustable for inflation; (ii) certain actual costs, including crude oil
transportation costs, import duties and taxes; and (iii) a deemed margin, which
varies according to the grade of crude oil or other feedstock delivered. Deemed
costs are adjusted periodically based on inflation rates for specific deemed
cost components. Adjustments to margins track, but are less than, inflation
rates. Because deemed operating costs and the slate of refined products deemed
to be produced from a given barrel of crude oil or other feedstocks do not
necessarily reflect the actual costs and yields in any period and also because
the market value of the refined products used in the pricing formula does not
necessarily reflect the actual price received for the refined products, the
actual refining margin earned by LCR under the Crude Supply Contract will vary
depending on, among other things, the efficiency with which LCR conducts its
operations during such period.
S-3
<PAGE>
Notwithstanding the limitations discussed above, however, the Crude Supply
Contract is designed to reduce the inherent volatility of earnings and cash
flow of LCR's refining operations irrespective of market fluctuations of either
crude oil or refined products. Specifically, should the market value of refined
products "deemed" to be produced from the Venezuelan crude oil increase, the
cost of crude oil to LCR will also increase. Alternatively, if the market value
of refined products "deemed" to be produced from the Venezuelan crude oil
decreases, the cost of crude oil to LCR will also decrease. This results in
relatively stable "deemed" margins regardless of the market volatility of
either refined products or crude oil. If the actual yields, costs or volumes
differ substantially from those contemplated by the Crude Supply Contract, the
benefits of this agreement to LCR could be substantially different than
anticipated.
RECENT DEVELOPMENTS
The Company reported net income for the full year of 1995 of $389 million, or
$4.86 per share, compared to $223 million, or $2.78 per share, in 1994. Fourth
quarter 1995 earnings were $27 million, or $.34 per share, versus $103 million,
or $1.28 per share, in the fourth quarter of 1994. Olefins margins declined
significantly in the fourth quarter of 1995 as supply/demand conditions
worsened. Compared to the 1995 third quarter, when Lyondell earned $100
million, or $1.25 per share, 1995 fourth quarter results reflected the decline
in petrochemical markets as well as coker downtime at the LCR Refinery and
downtime for a scheduled maintenance turnaround and capacity expansion at one
of the olefins units at the Channelview Complex. Other factors affecting 1995
fourth quarter results versus the same period in 1994 were lower methanol
profitability, offset by increased contributions from polymers and aromatics
and better refining performance at LCR, where major turnarounds limited 1994
results.
Major factors affecting the Company's 1995 performance included:
. Strong market conditions for petrochemicals and polymers in the first half
of the year followed by substantially weaker markets in the fourth quarter.
. The acquisition of the Alathon(R) high-density polyethylene business, which
contributed significantly to 1995 results.
. Significantly improved aromatics profitability at LCR.
. At LCR, the beneficial impact of the Crude Supply Contract with LAGOVEN and
improved operating experience with respect to processing heavy Venezuelan
crude oil.
The Board of Directors of Lyondell has approved a 1996 capital budget of $125
million. Petrochemical projects account for $79 million of the total, and $46
million is budgeted for projects at LCR. In addition, Lyondell will provide
funding of approximately $100 million for the Upgrade Project.
Approximately 25% of the 1996 petrochemical budget is for the completion of
three previously announced capacity expansions, increases of approximately: 7%
in olefins capacity at the Company's Channelview Complex; 33% in polypropylene
capacity at its Bayport Polymers facility; and 100% in alkylation capacity at
the Channelview Complex. Other major petrochemical projects include process
control upgrades at several operating units.
As in previous years, the majority of the capital spending at LCR other than
for the Upgrade Project is for environmental, health and safety-related
projects. It is expected that Lyondell will provide about half of the $46
million budgeted for LCR from its own cash flow, with the remainder funded from
a restricted cash reserve and from CITGO's reinvested earnings during 1996.
S-4
<PAGE>
Capital spending on the Upgrade Project from project inception in 1993
through the end of 1995 has been $602 million, including $458 million in 1995.
CITGO contributions and external borrowing have provided the majority of the
project funding to date. Present funding is 50% borrowing from a committed bank
facility, 25% in required capital contributions from CITGO and 25% in
subordinated loans from Lyondell.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Securities
offered hereby for the repayment of (i) approximately $103 million of the
Company's short-term indebtedness incurred to acquire the Alathon(R) high-
density polyethylene business in May 1995, which indebtedness had an effective
interest rate of 6.42% at December 31, 1995 and (ii) the Company's Notes Due
June 1996 in the amount of $150 million, originally issued in May 1989, which
have an effective interest rate of 9.95%, and intends to use the remainder for
general corporate purposes. Prior to such uses, the net proceeds from the sale
of the Securities will be placed in temporary investments.
CAPITALIZATION (UNAUDITED)
The following table sets forth the capitalization of the Company and its
consolidated subsidiaries as of December 31, 1995, and as adjusted to give
effect to the issuance of the Securities offered hereby.
<TABLE>
<CAPTION>
AS
ACTUAL ADJUSTED
------ --------
(MILLIONS OF DOLLARS)
<S> <C> <C>
Cash, restricted cash and
equivalents.............. $ 10 $ 204
====== ======
Current maturities of
long-term debt (9.95%
Notes Due 1996)(1)....... $ 150 $ 150
Notes payable............. 103 --
Long-term debt:
8.25% Notes Due 1997.... 100 100
10.0% Notes Due 1999.... 150 150
9.125% Notes Due 2002... 100 100
Medium-Term Notes....... 207 207
LCR 5-year term credit
facility............... 250 250
6.50% Notes Due 2006.... -- 150
7.55% Debentures Due
2026................... -- 150
Minority interest......... 459 459
Stockholders' equity...... 380 380
------ ------
Total capitalization...... $1,899 $2,096
====== ======
</TABLE>
- --------
(1) Repayment of the current maturities of long-term debt will occur in June
1996.
S-5
<PAGE>
SELECTED FINANCIAL DATA (UNAUDITED)
MILLIONS OF DOLLARS EXCEPT PER SHARE AMOUNTS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE TWELVE MONTHS
INCOME STATEMENT ENDED DECEMBER 31 ENDED DECEMBER 31
---------------------- ----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales and other operating
revenues...................... $ 1,143 $ 1,096 $ 4,936 $ 3,857
Operating costs and expenses:
Cost of sales................ 1,023 886 4,026 3,296
Selling, general and
administrative expenses..... 56 35 204 137
---------- ---------- ---------- ----------
Operating income........... 64 175 706 424
Interest expense............... (21) (18) (80) (74)
Interest income................ 1 2 6 5
Minority interest in LYONDELL-
CITGO Refining Co. Ltd........ (2) -- (14) (6)
---------- ---------- ---------- ----------
Income before income taxes... 42 159 618 349
Provision for income taxes..... 15 56 229 126
---------- ---------- ---------- ----------
Net income..................... $ 27 $ 103 $ 389 $ 223
========== ========== ========== ==========
Earnings per share............. $ .34 $ 1.28 $ 4.86 $ 2.78
========== ========== ========== ==========
Avg. no. common shares
outstanding (thousands)....... 80,000 80,000 80,000 80,000
========== ========== ========== ==========
<CAPTION>
FOR THE THREE MONTHS FOR THE TWELVE MONTHS
SELECTED FINANCIAL & OPERATING ENDED DECEMBER 31 ENDED DECEMBER 31
DATA ---------------------- ----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SALES AND OTHER OPERATING
REVENUES
Petrochemical segment.......... $ 555 $ 613 $ 2,657 $ 1,973
Refinery segment:
Products..................... 551 473 2,272 1,976
Crude........................ 109 93 370 296
Intersegment eliminations...... (72) (83) (363) (388)
---------- ---------- ---------- ----------
Total........................ $ 1,143 $ 1,096 $ 4,936 $ 3,857
========== ========== ========== ==========
OPERATING INCOME
Petrochemical segment.......... $ 52 $ 186 $ 641 $ 413
Refinery segment............... 24 (1) 124 54
Unallocated.................... (12) (10) (59) (43)
---------- ---------- ---------- ----------
Total........................ $ 64 $ 175 $ 706 $ 424
========== ========== ========== ==========
SALES VOLUMES (EXCLUDES
INTERSEGMENT SALES)
Selected petrochemical products
(millions)
Ethylene, propylene and
polymers (lbs).............. 1,719 1,584 6,832 6,090
Other olefins (lbs).......... 207 291 1,030 1,048
Methanol (gallons)........... 54 41 199 169
Aromatics (gallons).......... 34 38 152 160
Refinery products (thousand
barrels per day)
Gasoline..................... 113 109 109 109
Heating oil (no. 2
distillate)................. 55 37 52 44
Jet fuel..................... 27 18 29 24
Aromatics.................... 8 8 8 8
Other refinery products...... 55 44 56 46
---------- ---------- ---------- ----------
Total refinery products
volumes................... 258 216 254 231
========== ========== ========== ==========
REFINERY RUNS (THOUSAND BARRELS
PER DAY)
Blended crude oil............ 236 160 238 209
Unfinished stock............. 50 78 48 64
---------- ---------- ---------- ----------
Total...................... 286 238 286 273
========== ========== ========== ==========
</TABLE>
S-6
<PAGE>
SELECTED FINANCIAL DATA (UNAUDITED)
MILLIONS OF DOLLARS
<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------
<S> <C>
CONDENSED BALANCE SHEET
Cash, restricted cash and cash equivalents......................... $ 10
Accounts receivable, inventories and other current assets.......... 668
Fixed assets (net), and other non-current assets................... 1,928
------
Total assets..................................................... $2,606
======
Current liabilities................................................ $ 750
Long-term debt..................................................... 807
Other liabilities and deferred credits............................. 210
Minority interest.................................................. 459
Stockholders' equity............................................... 380
------
Total liabilities and stockholders' equity....................... $2,606
======
</TABLE>
<TABLE>
<CAPTION>
CASH AND CASH EQUIVALENTS
FOR THE TWELVE MONTHS ENDED
DECEMBER 31, 1995
---------------------------
<S> <C>
CASH FLOW
Net income.......................................... $ 389
Non-cash transactions:
Depreciation and amortization..................... 86
Deferred taxes.................................... 3
Change in working capital/other..................... (7)
-----
Cash flow from operations......................... 471
Minority owner contributions........................ 176
Additions to fixed assets:
Refinery upgrade project.......................... (458)
Refinery segment--other........................... (47)
Petrochemical segment--ALATHON acquisition........ (356)
Petrochemical segment--other...................... (121)
Net proceeds from short-term debt................... 83
Net proceeds from long-term debt.................... 240
Dividends paid...................................... (72)
-----
Incr./(Decr.) in cash and cash equivalents.......... (84)
Cash and cash equivalents at beginning of period.... 94
-----
Cash and cash equivalents at end of period.......... $ 10
=====
</TABLE>
S-7
<PAGE>
DESCRIPTION OF THE SECURITIES
The Notes and the Debentures will each constitute a series of Debt Securities
described in the accompanying Prospectus. The Notes will be limited to
$150,000,000 aggregate principal amount and will mature on February 15, 2006.
The Debentures will be limited to $150,000,000 aggregate principal amount and
will mature on February 15, 2026. Reference should be made to the accompanying
Prospectus for a detailed summary of additional provisions of the Securities
and of the 1996 Indenture under which the Securities are issued (such 1996
Indenture as supplemented and amended from time to time in accordance with the
terms thereof being hereinafter referred to as the "1996 Indenture.")
Capitalized terms not otherwise defined herein have the meanings specified in
the 1996 Indenture.
INTEREST
Except as otherwise provided in the 1996 Indenture, interest on the
Securities as set forth on the cover page of this Prospectus Supplement will
accrue from February 21, 1996 and is to be payable semi-annually on February 15
and August 15, beginning August 15, 1996, to the persons in whose names the
Securities are registered at the close of business on the next preceding
February 1 and August 1.
REDEMPTION
The Securities may not be redeemed prior to maturity.
TRUSTEE
The Trustee for the Securities is Texas Commerce Bank National Association
under the 1996 Indenture dated as of January 29, 1996, between Lyondell and
Texas Commerce Bank National Association.
BOOK-ENTRY SYSTEM
The Securities initially will be represented by one or more global securities
(the "Global Securities") deposited with The Depository Trust Company ("DTC")
and registered in the name of the nominee of DTC. Except as set forth below,
the Securities will be available for purchase in denominations of $1,000 and
integral multiples thereof in book-entry form only. The term "Depository"
refers to DTC or any successor depository.
DTC has advised the Company and the Underwriters as follows: DTC is a
limited-purpose trust company organized under the laws of the State of New
York, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities of persons who have accounts with DTC
("participants") and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic book-
entry changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates. DTC's participants include
securities brokers and dealers (including the Underwriters), banks, trust
companies, clearing corporations and certain other organizations, some of which
(and/or their representatives) own DTC. Access to DTC's book-entry system is
also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
either directly or indirectly.
S-8
<PAGE>
Upon the issuance by the Company of Securities represented by the Global
Securities, the Depository or its nominee will credit, on its book-entry
registration and transfer system, the respective principal amounts of the
Securities represented by such Global Securities to the accounts of
participants. The accounts to be credited shall be designated by the
Underwriters. Ownership of beneficial interests in Securities represented by
the Global Securities will be limited to participants or persons that hold
interests through participants. Ownership of such beneficial interests in
Securities will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the Depository (with respect to
interests of participants in the Depository), or by participants in the
Depository or persons that may hold interests through such participants (with
respect to persons other than participants in the Depository). The laws of some
states require that certain purchasers of securities take physical delivery of
such securities in definitive form. Such limits and such laws may impair the
ability to transfer beneficial interests in Securities represented by Global
Securities.
So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, the Depository or its nominee, as the
case may be, will be considered the sole owner or holder of the Securities
represented by such Global Security for all purposes under the 1996 Indenture.
Except as provided below, owners of beneficial interests in Securities
represented by Global Securities will not be entitled to have the Securities
represented by such Global Securities registered in their names, will not
receive or be entitled to receive physical delivery of Securities in definitive
form and will not be considered the owners or holders thereof under the 1996
Indenture. Unless and until the Global Securities are exchanged in whole or in
part for individual certificates evidencing the Securities represented thereby,
such Global Securities may not be transferred except as a whole by the
Depository for such Global Securities to a nominee of such Depository or by a
nominee of such Depository to such Depository or another nominee of such
Depository or by the Depository or any nominee of such Depository to a
successor Depository or any nominee of such successor Depository.
Payments of principal of and interest on the Securities represented by Global
Securities registered in the name of the Depository or its nominee will be made
by the Company through the Trustee (or any paying agent appointed by the
Company) to the Depository or its nominee, as the case may be, as the
registered owner of the Securities represented by such Global Securities.
The Company has been advised that the Depository or its nominee, upon receipt
of any payment of principal or interest in respect of the Securities
represented by Global Securities, will credit immediately the accounts of the
related participants with payment in amounts proportionate to their respective
beneficial interest in the Securities represented by the Global Securities as
shown on the records of the Depository. The Company expects that payments by
participants to owners of beneficial interests in the Securities represented by
the Global Securities will be governed by standing customer instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name." Such payments will
be the responsibility of such participants.
If the Depository is at any time unwilling or unable to continue as
Depository and a successor Depository is not appointed by the Company within 90
days, the Company will issue individual Securities in definitive form in
exchange for the Global Securities. In addition, the Company may at any time
and in its sole discretion determine not to have Global Securities, and, in
such event, will issue individual Securities in definitive form in exchange for
the Global Securities. In either instance, the Company will issue Securities in
definitive form, equal in aggregate principal amount to the Global Securities,
in such names and in such principal amounts as the Depository shall request.
Securities so issued in definitive form will be issued in denominations of
$1,000 and integral multiples thereof and will be issued in registered form
only, without coupons.
Neither the Company, the Trustee, any paying agent nor the registrar for the
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Securities represented by such Global Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
S-9
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
between the Company and Salomon Brothers Inc, as Representative of the
Underwriters, (the "Underwriting Agreement"), the Company has agreed to sell to
each of the Underwriters named below, and each of the Underwriters has
severally agreed to purchase, the principal amount of Securities set forth
opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF PRINCIPAL AMOUNT
UNDERWRITER NOTES OF DEBENTURES
----------- ------------ ----------------
<S> <C> <C>
Salomon Brothers Inc ......................... $ 67,500,000 $ 67,500,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ........................... 67,500,000 67,500,000
BA Securities, Inc. .......................... 7,500,000 7,500,000
Chemical Securities Inc. ..................... 7,500,000 7,500,000
------------ ------------
Total....................................... $150,000,000 $150,000,000
============ ============
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all the Securities
offered hereby if any Securities are purchased. In the event of default by any
Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the Underwriting Agreement may be terminated.
The Company has been advised by the Underwriters that they propose initially
to offer the Securities to the public at the public offering price set forth on
the cover page of this Prospectus Supplement, and to certain dealers at such
price less a concession of not more than .4% of the principal amount of the
Notes and not more than .5% of the principal amount of the Debentures. The
Underwriters may allow, and such dealers may reallow, a concession of not more
than .25% of the principal amount of the Securities to certain other dealers.
After the initial public offering, the public offering price and such
concession may be changed from time to time.
The Company has been advised by the Underwriters that they intend to make a
market in the Securities, but that they are not obligated to do so and may
discontinue making a market at any time without notice. The Company currently
has no intention to list the Securities on any securities exchange, and there
can be no assurance given as to the liquidity of the trading market for the
Securities.
The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain civil liabilities, including liabilities
under the Securities Act of 1933, as amended, or contribute to payments which
the Underwriters may be required to make in respect thereof.
The Underwriters may be customers of, engage in transactions with, or perform
services for the Company in the ordinary course of business. Chemical
Securities Inc. is an affiliate of Texas Commerce Bank National Association
which is a lender to the Company and is the Trustee. See "Description of the
Securities--Trustee."
LEGAL MATTERS
The validity of the Securities will be passed upon for the Company by Jeffrey
R. Pendergraft, Esq., General Counsel of Lyondell, and for the Underwriters by
Cravath, Swaine & Moore, New York, New York. Mr. Pendergraft beneficially owns
60,538 shares of the Company's common stock.
S-10
<PAGE>
PROSPECTUS
[LOGO OF LYONDELL PETROCHEMICAL APPEARS HERE]
DEBT SECURITIES
---------------
Lyondell Petrochemical Company ("Lyondell" or the "Company") may offer and
issue from time to time debt securities (the "Debt Securities") with an
aggregate initial offering price of $300,000,000 (or the equivalent thereof in
one or more foreign currencies or composite currencies). The Debt Securities
may be sold for U.S. dollars or one or more foreign or composite currencies,
and the principal of and any interest on the Debt Securities may likewise be
payable in U.S. dollars or one or more foreign or composite currencies.
The Debt Securities will be offered to the public on terms determined by
market conditions at the time of sale. The Debt Securities may be issued in one
or more series with the same or various maturities at par or a premium or with
an original issue discount. The specific designation, aggregate principal
amount, currency, purchase price, maturity, rate or method of calculation of
interest and time of payment thereof, whether such Debt Securities are to be
issued in book-entry form, redemption, pre-payment or sinking fund provisions,
any other specific terms, and any listing on a securities exchange of Debt
Securities in respect of which this Prospectus is being delivered (the "Offered
Debt Securities") will be set forth in an accompanying prospectus supplement
(the "Prospectus Supplement") together with the terms of offering of the
Offered Debt Securities.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
----------------
The Debt Securities may be sold directly by the Company, through agents
designated from time to time, through underwriting syndicates represented by
managing underwriters, by underwriters without a syndicate, or by dealers. See
"Plan of Distribution". If any agents of the Company or any underwriters are
involved in the sale of the Offered Debt Securities, the names of such agents
or underwriters and any applicable commissions or discounts will be set forth
in the Prospectus Supplement. The net proceeds to the Company from such sale
also will be set forth in the Prospectus Supplement.
----------------
The date of this Prospectus is February 7, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission may
be inspected and copied at the Public Reference Section of the Commission at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the
following Regional Offices of the Commission: Chicago Regional Office, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and New York Regional
Office, Seven World Trade Center, New York, New York 10048. Copies of such
material may also be obtained from the Public Reference Section of the
Commission at its principal office at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, at prescribed rates. Certain Securities of the Company
are listed on the New York Stock Exchange. The Company's registration
statements, reports, proxy statements and other information may also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
This Prospectus, which constitutes a part of a registration statement on Form
S-3 (the "Registration Statement") filed by the Company with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"), omits
certain of the information set forth in the Registration Statement. Reference
is hereby made to the Registration Statement and to the exhibits thereto for
further information with respect to the Company and the securities offered
hereby. Statements contained herein concerning the provisions of such documents
are necessarily summaries of such documents, and each such statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the Commission.
The Company is incorporated in Delaware, and its principal executive offices
are located at 1221 McKinney Street, Suite 1600, Houston, Texas 77002
(telephone: (713) 652-7200).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates herein by this reference the following documents
filed pursuant to the Exchange Act (File No. 1-10145), which also have been
filed with the Commission:
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1994.
(b) The Company's Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 1995, June 30, 1995 and September 30, 1995.
(c) The Company's Current Reports on Form 8-K dated May 1, 1995, (as
amended by Form 8-K/A dated June 26, 1995), December 8, 1995 and January
31, 1996.
(d) The Company's Registration Statement on Form 8-A dated December 8,
1995.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering made hereby shall be deemed to be
incorporated by reference in this Prospectus and to be part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated herein by reference shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Prospectus to the extent that a statement contained herein or in any
other subsequently filed incorporated document or in any accompanying
prospectus supplement modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
Copies of all documents incorporated herein by reference other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference) will be provided without charge to each person who receives a copy
of this Prospectus upon request to the Company, 1221 McKinney Street, Suite
1600, Houston, Texas 77002, Attention: Assistant Secretary (telephone: (713)
652-7200).
<PAGE>
LYONDELL PETROCHEMICAL COMPANY
COMPANY OVERVIEW
Lyondell is a leading manufacturer and marketer of petrochemicals and,
through its interest in LYONDELL-CITGO Refining Company Ltd. ("LCR"), of
refined petroleum products. The Company's corporate headquarters and
manufacturing facilities are located in the Houston, Texas area.
The Company produces a wide variety of petrochemicals, including olefins
(primarily ethylene, propylene and butadiene), polyolefins (high-density
polyethylene, low density polyethylene and polypropylene), methanol, MTBE
(methyl tertiary butyl ether) and aromatics. Lyondell's petrochemical products
are used in the manufacture of other chemicals and products which in turn are
used in the production of a wide variety of consumer and industrial products.
The Company's refining business is conducted through its approximate 90
percent interest in LCR, which operates the eighth largest refinery in the
United States (the "Refinery"). LCR sells substantially all of the gasoline,
jet fuel and heating oil it produces to CITGO Petroleum Corporation ("CITGO"),
which currently has an approximate 10 percent interest in LCR. In turn, LCR has
a long-term crude oil supply contract with Lagoven, an affiliate of PDVSA, the
National Oil Company of Venezuela. Both CITGO and Lagoven are subsidiaries of
PDVSA. LCR is currently undertaking an upgrade project at the Refinery. The
cost estimate for the upgrade project, previously estimated at $980 million, is
currently undergoing further study and could be increased. The revised cost
estimate will depend on a number of factors, including the impact of scheduling
decisions. Any increase is expected to be less than 10%. If total spending on
the upgrade project exceeds $1 billion, Lyondell expects to fund one-half of
these additional costs. LCR also produces fuel oil and aromatics, as well as
lubricants for the transportation, oil drilling and food processing industries.
Lyondell was originally created by Atlantic Richfield Corporation ("ARCO") as
a separate division (the "Lyondell Division") in 1985 through the combination
of certain of the operations of its petrochemical complex in Channelview, Texas
and the Refinery. Effective July 1, 1988, ARCO transferred substantially all
the assets and liabilities relating to the integrated petrochemical and
petroleum processing business of the Lyondell Division to a wholly-owned
subsidiary incorporated under the laws of the state of Delaware. In February
1990, the Company acquired a polypropylene plant and a low density polyethylene
plant located in Pasadena, Texas. On July 1, 1993, the Company and CITGO
announced the commencement of operations of LCR, a new entity formed and owned
by the Company and CITGO in order to own, operate and upgrade the Company's
refining business. In May 1995, the Company acquired Occidental Chemical
Corporation's Alathon(R) high-density polyethylene ("HDPE") business. Assets
involved in this acquisition included resin production facilities in Matagorda
and Victoria, Texas, related research and development activities and the rights
to the Alathon(R) trademark.
In exchange for the initial transfer of petrochemical and refining assets and
liabilities in 1988, Lyondell issued ARCO additional shares of its Common
Stock, bringing ARCO's stock ownership to 80,000,000 shares, which represented
all of the then outstanding Common Stock. In January 1989, ARCO completed an
initial public offering of shares of Lyondell's Common Stock, and ARCO
currently owns 39,921,400 shares, or 49.9 percent of the outstanding shares. In
August 1994, ARCO completed an offering of three-year debt securities
("Exchangeable Notes") exchangeable pursuant to the terms of the Exchangeable
Notes upon maturity, at ARCO's option, into Lyondell Common Stock or cash with
an equal value. If ARCO elects to deliver shares of Lyondell Common Stock at
the maturity of the Exchangeable Notes, ARCO's equity interest in Lyondell will
be substantially reduced or eliminated, depending on the price of Lyondell
Common Stock at such time.
3
<PAGE>
USE OF PROCEEDS
Proceeds to be received from the sale of the Debt Securities offered hereby
will be used, together with internally generated funds, for general corporate
purposes, including capital expenditures and retirement of maturing debt. Any
specific allocation of the proceeds to a particular purpose that has been made
as of the date of any Prospectus Supplement will be described therein. If
additional funds are required, they may be provided out of the Company's cash
resources or from the proceeds of the sale of other securities or other
borrowings. Pending ultimate application, the proceeds from the sale of the
Debt Securities will be used to reduce short-term debt or will be invested in
marketable securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for the
Company for the five years ended December 31, 1995:
YEAR ENDED DECEMBER 31
-----------------------------
<TABLE>
<S> <C> <C> <C> <C>
1995 1994 1993 1992 1991
6.8 4.8 1.2 1.4 5.0
</TABLE>
For the purposes of calculating the ratio of earnings to fixed charges,
"earnings" consist of income before income taxes and cumulative effect of
accounting changes plus fixed charges (excluding capitalized interest). "Fixed
charges" include interest expense, capitalized interest, amortization of debt
issuance costs and a portion of operating lease rent expense deemed to be
representative of interest.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be unsecured obligations issued under an indenture
dated as of January 29, 1996 (the "1996 Indenture") between Lyondell and Texas
Commerce Bank National Association, as Trustee. A copy of the 1996 Indenture is
an exhibit to the Registration Statement of which this Prospectus forms a part.
The following statements are subject to the detailed provisions of the 1996
Indenture. Wherever particular provisions of the 1996 Indenture or terms
defined therein are referred to herein or in the Prospectus Supplement, such
provisions or terms are incorporated by reference as a part of the statements
made, and the statements are qualified in their entirety by such reference.
References in italics are to the 1996 Indenture. Capitalized terms not
otherwise defined herein shall have the meanings given to them in the 1996
Indenture.
GENERAL
The Debt Securities will rank on a parity with all other unsecured and
unsubordinated debt of the Company. The 1996 Indenture does not limit the
amount of debt, either secured or unsecured, which may be issued by the Company
under the 1996 Indenture or otherwise.
Debt Securities may be issued from time to time from which the Company may
receive up to an aggregate of $300,000,000 of proceeds and which will be
offered to the public on terms determined by market conditions at the time of
sale. The Debt Securities may be issued in one or more series with the same or
various maturities, at par or with an original issue discount.
Reference is made to the Prospectus Supplement for the following terms of the
Debt Securities offered thereby: (i) the designation of and any limit upon the
aggregate principal amount of the Debt Securities; (ii) the percentage of
principal amount at which such Debt Securities will be issued; (iii) the date
on which the Debt Securities will mature; (iv) the currency of denomination of
such Debt Securities, which may be in Dollars or in any foreign currency or
composite currency; (v) the designation of the currency or currencies in which
payment of the principal of, and premium, if any, and interest on such Debt
Securities will be made,
4
<PAGE>
and whether in the event the currency of denomination is other than Dollars,
payment of the principal of, and premium, if any, or the interest on such Debt
Securities, at the election of a Holder thereof, may instead be payable in the
currency of denomination; (vi) the rate or rates (which may be fixed or
floating) per annum, if any, at which the Debt Securities will bear interest;
(vii) the times at which any such interest will be payable; (viii) any index
used to determine the amounts of payments of principal of, and premium, if any,
and interest on such Debt Securities; (ix) any redemption terms; (x) whether
such Debt Securities are to be issued in book-entry form and, if so, the
identity of the depositary; and (xi) any other specific terms associated with
such Debt Securities.
DENOMINATION AND EXCHANGE
The Debt Securities shall be issued in fully registered form unless the
Prospectus Supplement for a particular issue provides otherwise. Any series of
Debt Securities may be issued in whole or in part in a book-entry form. The
Prospectus Supplement relating to a series of Debt Securities which may be
issued in book-entry form will specify the terms and procedures relating
thereto. Unless otherwise set forth in the applicable Prospectus Supplement,
Debt Securities in registered form will be issued in denominations of $1,000
and integral multiples thereof. Principal, premium, if any, and interest, is to
be payable to registered Holders of Debt Securities at the principal office of
the Trustee in New York, New York, or at any paying agency maintained at the
time by the Company for such purpose. At the option of the Company, payment of
interest to registered Holders of Debt Securities may be made by check mailed
to the address of the person entitled thereto as it appears on the register for
Debt Securities. Debt Securities may be presented for registration of transfer
or exchange at such office of the Trustee or at such other location or
locations as may be established pursuant to the 1996 Indenture without any
service charge but subject to the limitations provided in the Indenture.
GLOBAL SECURITIES
Debt Securities of a series may be issued in whole or in part in the form of
one or more global Debt Securities that will be deposited with, or on behalf
of, a depositary identified in the Prospectus Supplement relating to such
series. Global Debt Securities may be issued in either registered or bearer
form and in either temporary or permanent form. (Sections 2.02, 2.03 and 2.08)
The specific terms of the depositary arrangement with respect to a series of
Debt Securities and certain limitations and restrictions relating to Debt
Securities in bearer form will be described in the Prospectus Supplement
relating to such series.
LIMITATION ON LIENS
The Company agrees that neither it nor any Restricted Subsidiary will issue,
assume or guarantee any notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed ("Debt") secured by a mortgage, lien, pledge or
other encumbrance ("Mortgages") upon any Restricted Property without
effectively providing that the Debt Securities (together with, if the Company
so determines, any other indebtedness or obligation then existing or thereafter
created ranking equally with the Debt Securities) shall be secured equally and
ratably with (or prior to) such Debt so long as such Debt shall be so secured,
except that this restriction will not apply to: (a) Mortgages affecting
property of a corporation existing at the time it becomes a Subsidiary or at
the time it is merged into or consolidated with the Company or a Subsidiary;
(b) Mortgages on property existing at the time of acquisition thereof or
incurred to secure payment of all or part of the purchase price thereof or to
secure Debt incurred prior to, at the time of, or within 24 months after the
acquisition for the purpose of financing all or part of the purchase price; (c)
Mortgages on the property of the Company or a Subsidiary existing on the date
of the 1996 Indenture; (d) Mortgages on property to secure all or part of the
cost of construction or improvements thereon or to secure Debt incurred to
provide funds for any such purpose; (e) Mortgages which secure only
indebtedness owing by a Subsidiary to the Company or to a Subsidiary; (f)
certain Mortgages to government entities; and (g) any extension, renewal or
replacement of any Mortgage referred to in the foregoing clauses (a) through
(f). Notwithstanding the foregoing, the
5
<PAGE>
Company and any one or more Restricted Subsidiaries may, without securing the
Debt Securities, issue, assume or guarantee Debt which would otherwise be
subject to the foregoing restrictions in an aggregate principal amount which,
together with all other such Debt of the Company and its Restricted
Subsidiaries and the aggregate Value of Sale and Lease-Back Transactions (other
than those in connection with which the Company has voluntarily retired Funded
Debt) does not at any one time exceed the greater of $100 million or 10% of
Consolidated Net Tangible Assets of the Company and its consolidated
Subsidiaries. The following types of transactions shall not be deemed to create
Debt secured by Mortgage: mortgages required by any contract or statute in
order to permit the Company or a Subsidiary to perform any contract or
subcontract made by it with or at the request of the United States, any State
or any department, agency or instrumentality of either. (Sections 5.03 and
5.04)
The term Restricted Property means any of the Company's or a Subsidiary's
plants for the production of petrochemicals (other than such determined by the
Board of Directors not to be a principal plant) and any shares of capital stock
or indebtedness of a Restricted Subsidiary owned by the Company or a
Subsidiary. The term Restricted Subsidiary means any Subsidiary which owns
Restricted Property. The term Subsidiary will be defined to mean any
corporation at least a majority of the outstanding securities of which having
ordinary voting power to elect a majority of the board of directors of such
corporation (whether or not any other class of securities has or might have
voting power by reason of the happening of a contingency) is at the time owned
or controlled directly or indirectly by the Company or one or more Subsidiaries
or by the Company and one or more Subsidiaries. LCR is specifically excluded
from the definition of Subsidiary. The term Consolidated Net Tangible Assets
means the total amount of assets (less applicable reserves and other properly
deductible items) after deducting therefrom (i) all current liabilities
(excluding any thereof which are by their terms extendible or renewable at the
option of the obligor thereon to a time more than 12 months after the time as
of which the amount thereof is being computed), and (ii) all goodwill, trade
names, trademarks, purchased technology, patents, unamortized debt discount and
other like intangible assets, all as set forth on the most recent balance sheet
of the Company and its consolidated Subsidiaries and computed in accordance
with generally accepted accounting principles. (Article One)
LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS
The Company agrees that neither it nor any Restricted Subsidiary will enter
into any Sale and Lease-Back Transaction with respect to any Restricted
Property with any person (other than the Company or a Subsidiary) unless either
(a) the Company or such Restricted Subsidiary would be entitled, pursuant to
the above provisions, to incur Debt in a principal amount equal to or exceeding
the Value of such Sale and Lease-Back Transaction secured by a Mortgage on the
property to be leased, without equally and ratably securing the Debt
Securities, or (b) the Company during or immediately after the expiration of
four months after the effective date of such transaction applies to the
voluntary retirement of its Funded Debt an amount equal to the net proceeds of
the sale of the property leased in such transaction (subject to credits for
certain voluntary retirements of Funded Debt, including the Debt Securities).
(Section 5.04)
CONSOLIDATION, MERGER AND SALE
The 1996 Indenture provides that the Company may merge or consolidate with or
into any other corporation or sell or convey all or substantially all of its
property to any corporation, if (i) (a) in the case of a merger or
consolidation, the Company is the surviving corporation or (b) in the case of a
merger or consolidation where the Company is not the surviving corporation and
in the case of such a sale or conveyance, the successor or acquiring
corporation expressly assumes by supplemental indenture all the obligations of
the Company under the Debt Securities under the 1996 Indenture and (ii) no
default in the performance of any covenant or condition of the 1996 Indenture
shall arise as a result of such merger or consolidation, or such sale or
conveyance. In the event a successor corporation assumes the obligations of the
Company, such successor corporation shall succeed to and be substituted for the
Company under the 1996 Indenture and under the Debt Securities and any coupons
appertaining thereto and all obligations of the company shall terminate.
(Sections 12.01 and 12.03)
6
<PAGE>
MODIFICATION OF THE INDENTURE
The 1996 Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than 50% in aggregate
principal amount of the Debt Securities of each series affected by the
modification or amendment at the time outstanding, to modify the 1996 Indenture
or any supplemental indenture or the rights of the Holders of the Debt
Securities; provided that no such modification shall (a) extend the fixed
maturity of any Debt Security, or reduce the rate or extend the time of payment
of interest thereon, or reduce the principal amount thereof, or change the
method of computing the amount of principal thereof at any date, or change the
currency in which the Debt Security is payable, without the consent of the
Holder of each Debt Security so affected, or (b) reduce the aforesaid
percentage of Debt Securities, the consent of the Holders of which is required
for any such modification, without the consent of the Holders of each Debt
Security so affected. (Section 11.02)
EVENTS OF DEFAULT
The 1996 Indenture defines an Event of Default with respect to a particular
series of Debt Securities as being any one of the following events and such
other event as may be established for the Debt Securities of such series: (a)
default for 30 days in any payment of interest on such series; (b) default in
any payment of principal, or premium, if any, on such series when due; (c)
default for 30 days in the payment of any sinking fund installment when due;
(d) default for 90 days after appropriate notice in performance of any other
covenant in the 1996 Indenture applicable to that series; or (e) certain events
in bankruptcy, insolvency or reorganization. No Event of Default with respect
to a particular series of Debt Securities issued under the 1996 Indenture
necessarily constitutes an Event of Default with respect to any other series of
Debt Securities issued thereunder. In case an Event of Default shall occur and
be continuing with respect to a particular series of Debt Securities, the
Trustee or the Holders of not less than 25% in aggregate principal amount of
the Debt Securities then outstanding of the series (or, in the case of defaults
under (d) or (e), of the Debt Securities of all series) may declare the
principal or, in the case of discounted Debt Securities, the amount specified
in the terms thereof, of such series (or of all outstanding Debt Securities, as
the case may be) to be due and payable. Any Event of Default with respect to a
particular series of Debt Securities may be waived by the Holders of a majority
of the aggregate principal amount of the outstanding Debt Securities of such
series (or of the outstanding Debt Securities of all series, in the case of
defaults under (d) or (e)), except in each case a failure to pay principal, or
premium, if any, or interest on such Debt Security. (Section 7.01)
The 1996 Indenture requires the Company to file annually with the Trustee an
Officers' Certificate as to the absence of certain defaults under the terms of
the 1996 Indenture. (Section 5.08) The 1996 Indenture provides that the Trustee
may withhold notice to the Holders of the Debt Securities of any default
(except in payment of principal, or premium, if any, or interest) if it
considers it in the interest of the Holders of the Debt Securities to do so.
(Section 7.08)
Subject to the provisions of the 1996 Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the 1996
Indenture provides that the Trustee shall be under no obligation to exercise
any of its rights or powers under the 1996 Indenture at the request, order or
direction of the Holders of the Debt Securities unless such Holders shall have
offered to the Trustee reasonable indemnity. (Section 8.02) Subject to such
provisions for indemnification and certain other rights of the Trustee, the
1996 Indenture provides that the Holders of a majority in principal amount of
the outstanding Debt Securities of all series affected shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee. (Section 7.07)
Other than the restrictions on liens and Sale and Lease-Back Transactions
described above, the 1996 Indenture and the Debt Securities do not contain any
covenants or other provisions designed to afford holders of the Debt Securities
protection in the event of a highly leveraged transaction involving the Company
or any Subsidiary. (Section 7.01)
7
<PAGE>
DEFEASANCE
The 1996 Indenture provides that the Company, at the Company's option: (a)
will be Discharged from any and all obligations in respect of the securities of
a series (except for certain obligations to register the transfer or exchange
of Securities, replace stolen, lost or mutilated Securities, maintain paying
agencies and hold moneys for payment in trust) or (b) need not comply with
certain restrictive covenants of the 1996 Indenture, in each case if the
Company deposits, in trust with the Trustee, money or U.S. Government
Obligations which through the payment of interest thereon and principal thereof
in accordance with their terms will provide (without any reinvestment thereof)
money, in an amount sufficient to pay all the principal (including any
mandatory sinking fund payments) of, and interest and premium, if any, on, the
Securities of such series not later than one day before the dates such payments
are due in accordance with the terms of such Securities. To exercise any such
option, the Company is required to deliver to the Trustee an opinion of counsel
to the effect that if listed on any national securities exchange, such
Securities would not be delisted from such exchange as a result of the exercise
of such option. (Section 14.02)
CONCERNING THE TRUSTEE
The Trustee under the 1996 Indenture also acts as trustee under other
indentures of the Company and extends credit to the Company and its
Subsidiaries in the ordinary course of business.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities; (i) through underwriters or
dealers, (ii) directly to a limited number of institutional purchasers or to a
single purchaser, or (iii) through agents. The Prospectus Supplement with
respect to the Offered Debt Securities sets forth the terms of the offering of
the Offered Debt Securities, including the name or names of any underwriters,
the purchase price of the Offered Debt Securities and the proceeds to the
Company from such sale, any underwriting discounts and other items constituting
underwriters' compensation, any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers and any securities
exchanges on which the Offered Debt Securities may be listed.
If underwriters or dealers are used in the sale, the Debt Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
sale. Unless otherwise set forth in the Prospectus Supplement, the obligations
of the underwriters to purchase the Offered Debt Securities will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all the Offered Debt Securities if any are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
Offered Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Offered Debt Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If so indicated in the Prospectus supplement, the Company will authorize
agents, underwriters or dealers to solicit offers from certain types of
institutions to purchase Offered Debt Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject only to those conditions set forth
in the Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
8
<PAGE>
Underwriters and agents may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which the agents or underwriters may be required to
make in respect thereof. Agents and underwriters may be customers of, engage in
transactions with, or perform services for the Company in the ordinary course
of business. Each series of Debt Securities will be a new issue of securities
with no established trading market. Any underwriters to whom Debt Securities
are sold by the Company for public offering and sale may make a market in such
Debt Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any Debt Securities.
CERTAIN LEGAL MATTERS
Certain legal matters in connection with the Offered Debt Securities will be
passed upon for the Company by Jeffrey R. Pendergraft, Esq., General Counsel of
Lyondell, and for any underwriters, selling agents and certain other purchasers
by Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New
York 10019. Mr. Pendergraft beneficially owns 60,538 shares of Common Stock.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994, have
been audited by Coopers & Lybrand L.L.P., independent accountants, as set forth
in their report which includes an explanatory paragraph pertaining to a change
in the method of accounting for certain turnaround costs during 1993 included
therein, and are incorporated by reference in reliance upon such report and
upon the authority of that firm as experts in accounting and auditing.
9
<PAGE>
NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN CONNECTION WITH THE
OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR BY ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH INFORMATION IS GIVEN
IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents by Reference............................ S-2
Lyondell Petrochemical Company............................................. S-3
Recent Developments........................................................ S-4
Use of Proceeds............................................................ S-5
Capitalization............................................................. S-5
Selected Financial Data.................................................... S-6
Description of the Securities.............................................. S-8
Underwriting............................................................... S-10
Legal Matters.............................................................. S-10
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Lyondell Petrochemical Company............................................. 3
Use of Proceeds............................................................ 4
Ratio of Earnings to Fixed Charges......................................... 4
Description of Debt Securities............................................. 4
Plan of Distribution....................................................... 8
Certain Legal Matters...................................................... 9
Experts.................................................................... 9
</TABLE>
$300,000,000
[LOGO OF LYONDELL PETROCHEMICAL COMPANY APPEARS HERE]
$150,000,000
6.50% NOTES DUE 2006
$150,000,000
7.55% DEBENTURES DUE 2026
SALOMON BROTHERS INC
MERRILL LYNCH & CO.
BA SECURITIES, INC.
CHEMICAL SECURITIES INC.
PROSPECTUS SUPPLEMENT
DATED FEBRUARY 15, 1996
