<PAGE>
As filed with the Securities and Exchange Commission on April 5, 1999
Registration No. 333-60429
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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LYONDELL CHEMICAL COMPANY
LYONDELL TRUST I
LYONDELL TRUST II
LYONDELL TRUST III
(Exact name of each registrant as specified in its charter)
Delaware 95-4160558
76-0585767
Delaware 76-6470952
Delaware 76-6470953
Delaware (I.R.S. Employer
(State or other jurisdiction Identification No.)
of incorporation or organization)
One Houston Center, Suite 1600
1221 McKinney Street
Houston, Texas 77010
(713) 652-7200
(Address, including zip code, and telephone number,
including area code, of each registrant's principal executive offices)
Robert J. Millstone
Vice President and General Counsel
One Houston Center, Suite 1600
1221 McKinney Street
Houston, Texas 77010
(713) 652-7200
(Name, address, including zip code, and telephone number,
including area code, of agent for service for each registrant)
----------------
Copies to: Jeffrey Small
Stephen A. Massad Davis Polk & Wardwell
Baker & Botts, L.L.P. 450 Lexington Avenue
One Shell Plaza New York, NY 10017
910 Louisiana (212) 450-4000
Houston, Texas 77002
(713) 229-1234
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
<PAGE>
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Title of Each Class of Proposed Maximum Amount of
Securities to be Registered Aggregate Offering Price (1), (2), (3) Registration Fee (4)
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<S> <C> <C>
Senior Debt Securities and Subor-
dinated Debt Securities (collec-
tively, "Debt Securities") of
Lyondell Chemical Company.......
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Preferred Stock, $.01 par value,
of Lyondell Chemical Company
("Preferred Stock").............
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Common Stock, $1.00 par value, of
Lyondell Chemical Company ("Com-
mon Stock")(5)..................
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Subordinated Debt Securities of
Lyondell Chemical Company for
issuance directly to Lyondell
Trust I, Lyondell Trust II and
Lyondell Trust III ("Debt Trust
Securities")....................
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Preferred Trust Securities of
Lyondell Trust I, Lyondell Trust
II and Lyondell Trust III ("Pre-
ferred Securities").............
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Guarantee of Preferred Securities
of Lyondell Trust I, Lyondell
Trust II and Lyondell Trust III
by Lyondell Chemical Company....
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TOTAL............................ $4,000,000,000.00 $1,180,000.00
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) and exclusive of accrued interest and dividends,
if any. In no event will the aggregate initial offering price of all
securities issued from time to time pursuant to this Registration
Statement exceed $4,000,000,000 or the equivalent thereof in foreign
currencies, foreign currency units or composite currencies. Any securities
registered hereunder may be sold separately or as units with other
securities registered hereunder.
(2) Such indeterminate number or amount of Debt Securities, Debt Trust
Securities, Preferred Stock and Common Stock of Lyondell Chemical Company
and Preferred Securities of Lyondell Trust I, Lyondell Trust II and
Lyondell Trust III as may from time to time be issued at indeterminate
prices. Debt Trust Securities may be issued and sold to Lyondell Trust I,
Lyondell Trust II and Lyondell Trust III, in which event such Debt Trust
Securities may later be distributed to the holders of Preferred Securities
upon a dissolution of the applicable Lyondell Trust and the distribution
of assets thereof.
(3) Lyondell Chemical Company is also registering under this Registration
Statement all other obligations that it may have with respect to Preferred
Securities issued by Lyondell Trust I, Lyondell Trust II and Lyondell
Trust III. No separate consideration will be received for the guarantee of
the Preferred Securities or any other such obligation.
(4) The filing fee of $1,180,000 was paid in connection with the initial
filing of this Registration Statement on July 31, 1998.
(5) Includes the associated rights to purchase common stock.
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
EXPLANATORY NOTE
The Registration Statement contains two forms of prospectuses to be used in
connection with offerings of the following securities:
(1) Debt Securities (consisting of Senior Debt Securities and Subordinated
Debt Securities), Preferred Stock and Common Stock of Lyondell Chemical
Company.
(2) Preferred Securities of Lyondell Trust I, Lyondell Trust II or Lyondell
Trust III, Debt Trust Securities of Lyondell Chemical Company and the
Guarantee by Lyondell Chemical Company of the Preferred Securities issued
by Lyondell Trust I, Lyondell Trust II or Lyondell Trust III.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement +
+becomes effective. This prospectus shall not constitute an offer to sell or +
+the solicitation of an offer to buy nor shall there be any sale of these +
+securities in any State in which such offer, solicitation or sale would be +
+unlawful prior to registration or qualification under the securities laws of +
+any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED APRIL 5, 1999
PROSPECTUS $4,000,000,000
[LOGO OF LYONDELL APPEARS HERE]
Lyondell Chemical Company
Common Stock
Preferred Stock
Debt Securities
Lyondell Chemical Company (the "Company" or "Lyondell") may from time to time
offer, together or separately, (i) shares of its common stock, par value $1.00
per share (the "Common Stock"), (ii) shares of its preferred stock, par value
$.01 per share (the "Preferred Stock"), (iii) unsecured senior debt securities
(the "Senior Debt Securities") and (iv) unsecured subordinated debt securities
(the "Subordinated Debt Securities"), in each case in one or more series and in
amounts, at prices and on terms to be determined at or prior to the time of
sale. The Senior Debt Securities and Subordinated Debt Securities are
collectively referred to herein as the "Debt Securities." The Debt Securities,
Common Stock and Preferred Stock are collectively referred to herein as the
"Securities."
See "Risk Factors" beginning on page 2 for a discussion of certain factors
that should be considered by prospective investors.
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 Common Stock and Preferred Stock offered pursuant to this Prospectus may
be issued in one or more series or issuances in U.S. dollars or in one or more
foreign currencies, currency units or composite securities to be determined at
or prior to the time of any offering. The Debt Securities offered pursuant to
this Prospectus may consist of debentures, notes or other evidences of
indebtedness in one or more series and in amounts, at prices and on terms to be
determined at or prior to the time of any such offering. As used herein, the
Debt Securities shall include securities denominated in United States dollars
or, at the option of the Company if so specified in an applicable Prospectus
Supplement, in any other currency, currency unit or composite currency, or in
amounts determined by reference to an index or formula. In addition, all or a
portion of the Debt Securities of a series may be issuable in temporary or
permanent global form. The Company's obligations under the Senior Debt
Securities will rank pari passu with all unsecured and unsubordinated debt (as
defined herein) of the Company. The Company's obligations under the
Subordinated Debt Securities will be subordinated in right of payment to the
prior payment in full of all Senior Debt (as defined herein). See "Description
of Debt Securities."
By separate prospectus, the form of which is included in the Registration
Statement of which this Prospectus forms a part, three Delaware statutory
business trusts (the "Lyondell Trusts"), each of which is a wholly owned
subsidiary of the Company, may from time to time severally offer preferred
securities guaranteed by the Company to the extent set forth therein, and the
Company may offer from time to time debt securities either directly or to a
Lyondell Trust. The aggregate public offering price of the securities to be
offered pursuant to this Prospectus and such other prospectus shall not exceed
$4,000,000,000 (or its equivalent in one or more foreign currencies, currency
units or composite currencies).
Specific terms of the Securities in respect of which this Prospectus is being
delivered (the "Offered Securities") will be set forth in a Prospectus
Supplement with respect to such Offered Securities, which Prospectus Supplement
will describe, without limitation and where applicable, the following: (i) in
the case of Common Stock, the specific designation, number of shares, purchase
price and the rights and privileges thereof, together with any qualifications
or restrictions thereon and any listing on a securities exchange; (ii) in the
case of Preferred Stock, the specific designation, number of shares, voting and
other powers, designations, preferences and relative participating, optional or
other special rights, and qualifications, limitations or restrictions
(including dividends, liquidation value, voting rights, terms for the
redemption, conversion or exchange thereof and any other specific terms of the
Preferred Stock) and any listing on a securities exchange; and (iii) in the
case of Debt Securities, the specific designation, aggregate principal amount,
ranking as senior debt or subordinated debt, authorized denomination, maturity,
rate (or method of determining the same) and times of payment of any interest,
any terms for optional or mandatory redemption, which may include redemption at
the option of holders upon the occurrence of certain events or payment of
additional amounts or any sinking fund provisions, any provisions with respect
to conversion or exchangeability, the initial public offering price, the net
proceeds to the Company, any listing on a securities exchange and any other
specific terms in connection with the offering. Unless otherwise indicated in
the Prospectus Supplement, the Company does not intend to list any of the
Securities other than the Common Stock on a national securities exchange.
The Offered Securities may be offered directly, through agents designated
from time to time, through dealers or through underwriters. Such agents or
underwriters may act alone or with other agents or underwriters. See "Plan of
Distribution." Any such agents, dealers or underwriters will be set forth in a
Prospectus Supplement. If an agent of the Company, or a dealer or underwriter
is involved in the offering of the Offered Securities, the agent's commission,
dealer's purchase price, underwriter's discount and net proceeds to the
Company, as the case may be, will be set forth in, or may be calculated from,
the Prospectus Supplement. Any underwriters, dealers or agents participating in
the offering may be deemed "underwriters" within the meaning of the Securities
Act of 1933.
The Common Stock is traded on the New York Stock Exchange under the symbol
"LYO." Any Common Stock offered will be traded, subject to notice of issuance,
on the New York Stock Exchange.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
The date of this Prospectus is , 1999.
<PAGE>
THE COMPANY
Lyondell Chemical Company ("Lyondell" or the "Company") is a vertically
integrated, global chemical company with leading market positions in all of
its major products and low cost operations. The Company's principal executive
offices are located at 1221 McKinney Street, Houston, Texas 77010 (telephone:
(713) 652-7200).
FORWARD-LOOKING STATEMENTS
Certain of the statements contained or incorporated by reference in this
Prospectus and the accompanying Prospectus Supplement are "forward-looking
statements" within the meaning of the federal securities laws. Although
Lyondell believes the expectations reflected in such forward-looking
statements are reasonable, they do involve certain inherent assumptions, risks
and uncertainties, and Lyondell can give no assurance that such expectations
will prove to have been correct. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of the risk factors set forth below and other factors set forth in or
incorporated by reference in this Prospectus and the accompanying Prospectus
Supplement. These factors include the cyclical and highly competitive nature
of the chemical and refining industries, uncertainties associated with the
United States and worldwide economies, current and potential governmental
regulatory actions in the United States and in other countries, substantial
chemical capacity additions resulting in oversupply and declining prices and
margins, raw material costs or supply arrangements, the Company's ability to
implement cost reductions, and operating interruptions (including leaks,
explosions, fires, mechanical failure, labor difficulties, unscheduled
downtime, transportation interruptions, spills and releases, and other
environmental risks). Many of such factors are beyond Lyondell's or its joint
ventures' ability to control or predict. Management cautions against putting
undue reliance on forward-looking statements or projecting any future results
based on such statements or present or prior earnings levels.
All subsequent written and oral forward-looking statements attributable to
the Company and persons acting on its behalf are qualified in their entirety
by the cautionary statements contained in this section and elsewhere in this
Prospectus.
RISK FACTORS
The following risk factors should be considered carefully with the
information provided elsewhere in this Prospectus and the accompanying
Prospectus Supplement and the documents incorporated by reference herein in
reaching a decision regarding an investment in the Securities offered hereby.
High Leverage and Related Matters
As of December 31, 1998, the Company had outstanding consolidated debt of
approximately $7.0 billion. In addition, the Company remains liable on $713
million of debt for which primary responsibility was assumed by Equistar
Chemicals, LP ("Equistar") in connection with the formation of Equistar. The
Company's consolidated ratio of earnings to fixed charges would have been 1.1
to 1 for 1998 on a pro forma basis if the acquisition of LCW and the related
debt incurrence had occurred on January 1, 1998.
The current amount of debt of the Company significantly exceeds the
Company's historical leverage and significantly increases its debt service
obligations. The Company's historical results and financial condition do not,
accordingly, reflect the potential constraints the increase in leverage may
impose on the Company. The
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Company's significant increase in leverage could have adverse effects on the
Company, including: (i) the leverage may make the Company more vulnerable to
industry cyclicality and may limit its ability to withstand competitive
pressures and adverse changes in environmental and other government
regulation, (ii) a substantial portion of cash flow from operations (as well
as cash generated from asset sales, if any, and financings) must be dedicated
to the payment of principal of and interest on debt and will not be available
for other uses such as capital expenditures or acquisitions, (iii) additional
financing is not available to the Company upon terms as favorable as those
previously available to the Company, which may limit the Company's business
growth, including its ability to effect potential acquisitions and (iv) the
Company may not be able to maintain its current dividend rate.
The Company's credit facilities and other indebtedness contain numerous
financial and other covenants that affect and restrict the Company's business.
The ability of the Company to meet its debt service obligations and capital
expenditure needs, maintain its dividend rate and comply with the covenants
and financial requirements in the credit facilities and other indebtedness
will largely depend on the future performance of the Company and availability
of additional financing to repay and refinance bank debt, both of which will
be subject to prevailing economic, market and competitive conditions and to
other factors beyond the Company's control. The breach of any of the covenants
or financial requirements in the credit facilities or other indebtedness could
result in a default thereunder, which would permit the lenders to declare the
loans immediately payable and to terminate future lending commitments.
As of December 31, 1998, Equistar, LYONDELL-CITGO Refining LP ("LCR") and
Lyondell Methanol Company, L.P. ("Lyondell Methanol") (collectively, the
"Joint Ventures") had, in the aggregate, outstanding debt of approximately
$2.9 billion and owners' equity of $4.6 billion. The ability of the Joint
Ventures to distribute cash to the Company is limited by their respective debt
service obligations. In addition, a default under certain Joint Venture debt
agreements would constitute a cross-default under the Company's credit
facilities. Certain debt instruments that were assumed by Equistar, but as to
which Lyondell remains an obligor as well, contain provisions that generally
provide that holders of such debt may, under certain limited circumstances,
require an obligor to repurchase the debt ("Put Rights"). The Put Rights would
be triggered by a specified decline in public ratings on such debt following
(i) certain events affecting control of Lyondell or Equistar or (ii) the
making by Lyondell or Equistar of certain dividends, distributions or
repurchases in excess of specified amounts. The debt subject to the Put Rights
consists of $150 million aggregate principal amount of notes maturing in June
1999, bearing interest at 10 percent, and $163 million aggregate principal
amount of medium-term notes maturing at various dates through 2005, with a
weighted average interest rate at December 31, 1998 of 9.87 percent. To date,
these Put Rights have not been triggered.
Industry Cyclicality and Overcapacity
The Company's historical operating results reflect the cyclical and volatile
nature of both the chemical and refining industries. The Company experienced
earnings declines in the fourth quarter of 1998 compared to the third quarter
of 1998 primarily because of lower prices in both the chemicals and refining
industries. Both industries are mature and capital intensive, and industry
margins are sensitive to supply and demand balances, which have historically
been cyclical. The chemical industry historically has experienced alternating
periods of tight supply, causing prices and profit margins to increase,
followed by periods of substantial capacity additions, resulting in oversupply
and declining prices and profit margins. Due to the commodity nature of most
of the Company's products, the Company is not necessarily able to protect its
market position by product differentiation or to pass on cost increases to its
customers. Accordingly, increases in raw material and other costs do not
necessarily correlate with changes in product prices, either in the direction
of the price change or in absolute magnitude. Moreover, a number of
participants in various segments of the chemical industry have announced plans
for expansion of plant capacity. There can be no assurance that future growth
in product demand will be sufficient to utilize this additional, or even
current, capacity. Excess industry capacity, to the extent it occurs,
depresses the Company's volumes and margins. As a result, the Company's
earnings are subject to significant fluctuation.
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<PAGE>
External factors beyond the Company's control, such as general economic
conditions, competitor action, international events and circumstances and
governmental regulation in the United States and abroad, can cause volatility
in feedstock prices, as well as fluctuations in demand for the Company's
products, product prices, volumes and margins, and can magnify the impact of
economic cycles on the Company's business. A number of the Company's products
are highly dependent on durable goods markets, such as housing and automotive,
that are particularly cyclical.
Intense Competition
The chemical industry is highly competitive. Many of the Company's
competitors are larger and have greater financial resources than the Company.
Among Lyondell's chemical competitors are some of the world's largest chemical
companies, including The Dow Chemical Company, Shell Chemical, BASF AG, Bayer
AG and Union Carbide Corporation. In the past several years, there have been a
number of mergers, acquisitions and spin-offs in the chemical industry. This
restructuring activity may result in fewer but more competitive producers with
greater financial resources than the Company.
Competition within the chemical industry is affected by a variety of
factors, including product price, reliability of product supply, technical
support, customer service, product quality and availability to the market of
potential substitute materials. Changes in the competitive environment,
including (i) the emergence of new competitors, (ii) the rate of capacity
additions by competitors, (iii) the intensification of price competition in
the Company's markets, (iv) the introduction of new or substitute products by
competitors, (v) technological innovations by competitors and (vi) new
environmental laws and regulatory requirements, could have a material adverse
effect on the business and operations of the Company.
Potential Difficulties in Integrating Recently Acquired and Combined
Operations
The Company acquired Lyondell Chemical Worldwide, Inc. (formerly ARCO
Chemical Company) ("LCW") in July 1998. The Company combined its
petrochemicals and polymers business with that of Millennium Chemicals Inc. to
form Equistar Chemicals, LP in December 1997. Equistar was expanded by the
addition of certain businesses previously held by Occidental Petroleum
Corporation in May 1998. The process of integrating the operations of LCW with
the Company has only recently begun, and the process of integrating the
operations of Equistar is not complete.
As is the case with any integration of major businesses that previously
operated independently, the integration processes for LCW and for Equistar
will require the dedication of significant management and operational
resources. The difficulties of combining operations may be exacerbated by the
necessity of coordinating geographically separate organizations, integrating
personnel with disparate business backgrounds and combining different
transaction processing and financial reporting systems and processes and
corporate cultures. The process of integrating operations could cause an
interruption of, or loss of momentum in, the activities of the combined
enterprise's business. In addition, the Company may suffer a loss of key
employees, customers or suppliers, loss of revenues, increases in costs or
other difficulties, some of which may not have been foreseen. There can be no
assurance that the Company will be able to realize the operating efficiencies,
cost savings and other benefits that are sought from such transactions.
Difficulties encountered in the integration processes could have a material
adverse effect on the business and operations of the Company.
Acquisitions, Dispositions and Joint Ventures
Each of Lyondell and Equistar actively seeks opportunities to maximize
efficiency or value through various transactions. These transactions may
include purchases or sales of assets or contractual arrangements or joint
ventures that are intended to result in the realization of synergies, the
creation of efficiencies or the generation of cash to reduce indebtedness. To
the extent permitted under Lyondell's and Equistar's credit facilities and
other indebtedness, some of these transactions may be financed by additional
borrowings by Lyondell or Equistar or by the issuance of equity securities.
These transactions may often affect the results of operations of Lyondell or
Equistar in the short term because of the costs associated with such
transactions, but they are expected to yield longer-term benefits if the
expected efficiencies and synergies of the transactions are realized. Factors
such as those described in "--Potential Difficulties in Integrating Recently
Acquired and Combined Operations" may make it difficult or impossible to
realize such expected efficiencies and synergies.
4
<PAGE>
Shared Control of Joint Ventures
The Company conducts a substantial amount of its operations through its
Joint Ventures. The Company shares control of these Joint Ventures with
unaffiliated third parties.
The Company's forecasts and plans with respect to these Joint Ventures
assume that its joint venture partners will observe their obligations with
respect to the Joint Ventures. In the event that any of the Company's joint
venture partners do not observe their commitments, it is possible that the
affected Joint Venture would not be able to operate in accordance with its
business plans or that the Company would be required to increase its level of
commitment in order to give effect to such plans.
As with any such joint venture arrangements, differences in views among the
joint venture participants may result in delayed decisions or in failures to
agree on major matters, potentially adversely affecting the business and
operations of the Joint Ventures and in turn the business and operations of
the Company.
Joint Venture Structure
The Company conducts a substantial amount of its operations through its
Joint Ventures. The Company's ability to meet its debt service obligations is
dependent, in part, upon the receipt of distributions from its Joint Ventures.
Subject to the provisions of the applicable debt agreements, future borrowings
by the Company's Joint Ventures may contain restrictions or prohibitions on
the payment of distributions by such Joint Ventures to the Company. Under
applicable state law, the Company's Joint Ventures may be limited in amounts
that they are permitted to pay as distributions on their equity interests.
Importance of Crude Oil Supply Agreement and Related Risks
Substantially all of the crude oil used by LCR as a feedstock for its
refinery is purchased under the Crude Supply Agreement with PDVSA Petroleo y
Gas S.A. ("PDVSA Oil"), which, like CITGO Petroleum Corporation ("CITGO"), is
a subsidiary of Petroleos de Venezuela, S.A., the Venezuelan national oil
company. The Crude Supply Agreement was entered into in 1993 and the Company
experienced the full effects of the Crude Supply Agreement beginning in 1997.
The Crude Supply Agreement incorporates formula prices to be paid by LCR for
the crude oil supplied 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 and energy
costs, (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 margins and 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 feedstock 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 varies depending on, among other things,
the efficiency with which LCR conducts its operations from time to time.
Although LCR believes that the Crude Supply Agreement reduces the volatility
of its earnings and cash flows, the Crude Supply Agreement also limits LCR's
ability to enjoy higher margins during periods when the market price of crude
oil is low relative to the then current market prices for refined products. In
addition, if the actual yields, costs or volumes of the LCR refinery differ
substantially from those contemplated by the Crude Supply Agreement, the
benefits of this agreement to LCR could be substantially diminished, and could
result in lower earnings and cash flow for LCR. Furthermore, there may be
periods during which LCR's costs for crude oil under the Crude Supply
Agreement may be higher than might otherwise be available to LCR from other
sources.
There are risks associated with enforcing the provisions of contracts with
companies such as PDVSA Oil that are non-United States affiliates of a
sovereign nation. It is impossible to predict how governmental policies may
change under the current or any subsequent Venezuelan government. In addition,
there are risks associated with enforcing judgments of United States courts
against entities whose assets are located outside of the United
5
<PAGE>
States and whose management does not reside in the United States. In addition,
all of the crude oil supplied by PDVSA Oil under the Crude Supply Agreement is
produced in Venezuela, a country that has experienced economic difficulties
and attendant social and political unrest in recent years. If the Crude Supply
Agreement is modified or terminated or this source of crude oil is otherwise
interrupted due to production difficulties, OPEC-mandated supply cuts,
political or economic events in Venezuela or other factors, LCR could
experience significantly greater volatility in its earnings and cash flows.
The parties each have the right to transfer their interests in LCR to
unaffiliated third parties in certain circumstances, subject to reciprocal
rights of first refusal. In the event that CITGO were to transfer its interest
in LCR to an unaffiliated third party, PDVSA Oil would have an option to
terminate the Crude Supply Agreement. Depending on then current market
conditions, any breach or termination of the Crude Supply Agreement could
adversely affect LCR, since LCR would have to purchase all of its crude oil
feedstocks in the merchant market, which could subject LCR to significant
price fluctuations. There can be no assurance that alternative crude oil
supplies providing similar margins would be available for purchase by LCR.
In late April 1998, LCR received notification from PDVSA of reduced delivery
of crude oil related to announced OPEC production cuts. In August 1998, LCR
began receiving reduced allocations of crude oil from PDVSA. Following
additional cutbacks announced by OPEC in late March 1999, LCR anticipates
further reductions in its allocation of crude oil under the Crude Supply
Agreement. Historically Venezuela has complied with OPEC-mandated supply cuts
by reducing crude supply. Decreased allocations of PDVSA crude oil tend to
reduce LCR's pretax income and, accordingly, Lyondell's pro rata share of
LCR's income. OPEC-mandated supply cuts are a force majeure event under the
Crude Supply Agreement for which the Company has no contractual remedy. While
to date LCR has been able to obtain alternate supplies of crude oil, the
margin for these crude oils has been less than for the extra heavy Venezuelan
crude oil purchased under the Crude Supply Agreement. There can be no
assurance that PDVSA will not announce further cutbacks in crude oil
production thereby reducing LCR's allocation of extra heavy crude oil or that
LCR will be able to continue to obtain adequate alternative supplies of crude
oil or at what cost Lyondell will be able to obtain such substitute crude oil.
Operating Hazards
The occurrence of material operating problems, including, but not limited
to, the events described below, may have a material adverse effect on the
productivity and profitability of a particular manufacturing facility, or on
the Company as a whole, during and after the period of such operational
difficulties. The Company's revenues are dependent on the continued operation
of its various production facilities (including the ability to complete
construction projects on schedule). The Company's operations are subject to
the usual hazards associated with chemical manufacturing and refining and the
related storage and transportation of feedstocks, products and wastes,
including pipeline leaks and ruptures, explosions, fires, inclement weather
and natural disasters, mechanical failure, unscheduled downtime, labor
difficulties, transportation interruptions, remediation complications,
chemical spills, discharges or releases of toxic or hazardous substances or
gases, storage tank leaks and other environmental risks. These hazards can
cause personal injury and loss of life, severe damage to or destruction of
property and equipment and environmental damage, and may result in suspension
of operations and the imposition of civil or criminal penalties. Furthermore,
the Company is also subject to present and future claims with respect to
workplace exposure, workers' compensation and other matters. The Company
maintains property, business interruption and casualty insurance which it
believes is in accordance with customary industry practices, but it is not
fully insured against all potential hazards incident to its business.
Environmental Considerations
The Company's operations and ownership and use of real property are subject
to extensive environmental, health and safety laws and regulations promulgated
by domestic and foreign governments at both the national and local level. Many
of these laws and regulations impose requirements relating to the clean-up of
contamination, impose liability in the event of damage of natural resources
and provide for substantial fines and
6
<PAGE>
potential criminal sanctions for violations. The nature of the chemical and
refining industries exposes the Company to risks of liability under such laws
and regulations due to the production, refining, storage, transportation and
sale of materials that can cause contamination or personal injury if released
into the environment. In addition, individuals could seek damages for alleged
personal injury or property damage due to exposure to chemicals at the
Company's facilities or to chemicals otherwise owned or controlled by the
Company. Environmental laws may have a significant effect on the nature and
scope of cleanup of contamination at current and former operating facilities,
the costs of transportation and storage of feedstocks and finished products
and the costs of the storage and disposal of wastes. Also, "Superfund"
statutes may impose joint and several liability for the costs of remedial
investigations and actions on the entities that generated waste, arranged for
disposal of the wastes, transported to or selected the disposal sites and the
past and present owners and operators of such sites. All such responsible
parties (or any one of them, including the Company) may be required to bear
all of such costs regardless of fault, legality of the original disposal or
ownership of the disposal site.
The Company expects that the nature of its businesses will continue to
subject the Company to increasingly stringent environmental and health and
safety laws and regulations. It is difficult to predict the future
interpretation and development of such laws and regulations or their impact on
future earnings and operations, but the Company anticipates that these
standards will continue to require increased capital expenditures and
operating costs. In particular, the ultimate effect of the Clean Air Act on
the Company's operations will depend on how the law is interpreted and
implemented pursuant to regulations that are currently being developed and on
additional factors such as the evolution of environmental control
technologies.
The Company's policy is to accrue costs relating to environmental matters
when it is probable that such costs will be required and the related costs can
be reasonably estimated. Estimated costs for future environmental compliance
and remediation or other costs are necessarily imprecise due to such factors
as the continuing evolution of environmental laws and regulatory requirements,
the availability and application of technology, the identification of
presently unknown remediation sites and the allocation of costs among the
responsible parties under applicable statutes. On a quarterly basis, the
Company evaluates the status of all significant existing or potential
environmental issues, develops or revises estimates of costs to satisfy known
remediation requirements (including those relating to "Superfund"
requirements) and adjusts its accruals accordingly; as of December 31, 1998,
the reserve was $48 million. Based upon information presently available, the
Company does not expect that such future costs will have a material adverse
effect on its competitive or financial position or its ongoing results of
operations. However, it is not possible to predict accurately the amount or
timing of costs of any future environmental remediation requirements. Such
costs could be material to future quarterly or annual results of operations.
MTBE
Pending or future legislative initiatives or litigation may materially
adversely affect the Company's MTBE sales or subject the Company to products
liability. The presence of MTBE in some water supplies in California and other
states due to gasoline leaking from underground storage tanks and in surface
water from recreational water craft has led to public concern that MTBE may
contaminate drinking water supplies, and thereby result in a possible health
risk. The Governor of California has announced an intention to eliminate MTBE
from gasoline sold in California by December 31, 2002. There have been claims
that MTBE travels more rapidly through soil, and is more soluble in water,
than most other gasoline components, and is more difficult and more costly to
remediate. Heightened public awareness about MTBE has resulted in certain
state and federal legislative initiatives that have sought either to rescind
the oxygenate requirement for reformulated gasoline sold in California and
other states or restrict the use of MTBE. There is ongoing review of this
issue and the ultimate resolution of the appropriateness of using MTBE could
result in a significant reduction in the Company's MTBE sales.
In addition, the Company has a take-or-pay MTBE sales contract with Atlantic
Richfield Company ("ARCO"), which contributes significant pre-tax margin. If
such legislative initiatives were enacted, ARCO has
7
<PAGE>
indicated that it might attempt to invoke a force majeure provision in the
ARCO contract in order to reduce the quantities of MTBE it purchases under, or
to terminate, the contract. The Company would vigorously dispute such action.
The contract has an initial term expiring December 31, 2002 and provides for
formula-based prices that are currently significantly above spot market prices
for MTBE. A significant reduction in the Company's sales under the ARCO
contract could have a negative impact on the Company's results of operations.
Foreign Operations, Country Risks and Exchange Rate Fluctuations
International operations and exports to foreign markets are subject to a
number of risks, including currency exchange rate fluctuations, trade
barriers, exchange controls, national and regional labor strikes, political
risks and risks of increases in duties and taxes, as well as changes in laws
and policies governing operations of foreign-based companies. Although the
Company uses various types of foreign currency forward, option and swap
contracts to reduce foreign exchange exposures with respect to revenues,
capital commitments and other expenses denominated in foreign currencies,
there can be no assurance that such hedging techniques will protect the
Company's reported results against such risks or that the Company will not
incur material losses on such contracts. In addition, earnings of foreign
subsidiaries and intercompany payments may be subject to foreign income tax
rules that may reduce cash flow available to meet required debt service and
other obligations of the Company.
A number of Asian and Latin American economies have experienced economic
difficulties in recent periods. Prolonged economic difficulties in the Asian
and Latin American markets could significantly impact worldwide demand and
thereby place downward pressure on margins, which, if material, could in turn
have an adverse effect on the business and operations of the Company.
Significant Fluctuations in Quarterly Results
The Company's quarterly results will vary significantly depending on various
factors, most of which are beyond the Company's control, including changes in
product prices, product demand, raw material costs or supply arrangements;
regional business activities, including a lower level of economic activity in
Europe during the summer; adverse developments in foreign markets;
fluctuations in shipments to customers; foreign exchange fluctuations;
unanticipated expenses; changes in interest rates; and the scheduling of plant
turnarounds.
Change of Control Related Provisions
Under the Company's credit facilities, a change in control of the Company is
an event of default, which would permit the lenders to declare the loans
thereunder immediately payable and to terminate future lending commitments.
Under the credit facilities, with certain exceptions, a change in control is
deemed to occur if any person or group acquires 20% or more of the Company's
Common Stock or there has generally been a change in a majority of the
Company's Board of Directors. The Company has adopted a stockholders' rights
plan. In addition, the Delaware General Corporation Law contains provisions
that impose restrictions on business combinations with interested parties and
the Company's By-Laws contain certain advance notice provisions. The
provisions of the credit facilities, the Delaware General Corporation Law, the
Company's stockholders' rights plan and the Company's By-Laws (as well as the
Put Rights described under "--High Leverage and Related Matters" above) may
have the effect of delaying, deferring or preventing a change in control of
the Company, which could prevent the Company's stockholders from receiving a
takeover premium for their Common Stock.
8
<PAGE>
USE OF PROCEEDS
Except as otherwise described in any Prospectus Supplement, the net proceeds
from the sale of the Offered Securities will be used for general corporate
purposes, which may include, but are not limited to, repayment or refinancing
of indebtedness, working capital, capital expenditures, acquisitions and
repurchases or redemptions of debt or equity securities of Lyondell, and may
initially be invested in short-term securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the periods indicated:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(a)................. 1.2x 4.6x 2.2x 6.8x 4.8x
Supplemental pro forma ratio of earnings to fixed
charges(b)........................................... 1.1x
</TABLE>
- --------
(a) The ratio of earnings to fixed charges has been calculated including
amounts for Lyondell and its proportionate share of amounts for Equistar
(57 percent through May 15, 1998 and 41 percent thereafter), LCR (58.75
percent for the year ended December 31, 1998, 86 percent for the first
quarter of 1997 and 58.49 percent for the remainder of 1997) and Lyondell
Methanol (75 percent for the year ended December 31, 1998), for the
periods in which Lyondell accounted for its respective investment in each
such Joint Venture using the equity method of accounting. Lyondell remains
liable on approximately $713 million of debt for which primary
responsibility was assumed by Equistar in connection with its formation.
Fixed charges include interest expense plus capitalized interest and the
portion of rental expense that represents an interest factor.
(b) The supplemental pro forma ratio of earnings to fixed charges gives effect
to the acquisition of LCW and the debt issued by the Company pursuant to
the related credit facilities as if such transactions had occurred as of
January 1, 1998.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company currently consists of
250,000,000 shares of Common Stock, par value $1.00 per share, and 80,000,000
shares of preferred stock, par value $.01 per share. The following summary
description of the capital stock of the Company is qualified in its entirety
by reference to the Certificate of Incorporation, as amended (the "Certificate
of Incorporation"), and the Amended and Restated By-Laws of the Company, as
amended (the "By-Laws"), copies of which are filed as exhibits to the
Company's Annual Report on Form 10-K.
Common Stock
The Company is currently authorized to issue 250,000,000 shares of Common
Stock, of which 77,021,797 shares of Common Stock were outstanding at December
31, 1998.
Holders of Common Stock ("Stockholders") are entitled (i) to receive such
dividends as may from time to time be declared by the Board of Directors of
the Company; (ii) to one vote per share on all matters on which the
Stockholders are entitled to vote; (iii) to act by written consent in lieu of
voting at a meeting of Stockholders; and (iv) to share ratably in all assets
of the Company available for distribution to the Stockholders, in the event of
liquidation, dissolution or winding up of the Company. The holders of a
majority of the shares of Common Stock represented at a meeting can elect all
of the directors.
Shares of Common Stock are not liable to further calls or assessments by the
Company for any liabilities of the Company that may be imposed on its
Stockholders under the laws of the State of Delaware, the state of
incorporation of the Company. There are no preemptive rights for the Common
Stock in the Certificate of Incorporation.
9
<PAGE>
The Transfer Agent, Registrar and Dividend Disbursing Agent for the Common
Stock is The Bank of New York.
Preferred Stock
The Company is currently authorized to issue up to 80,000,000 shares of
Preferred Stock, $.01 par value per share. The Board of Directors is able to
specify the precise characteristics of the Preferred Stock to be issued, in
light of current market conditions and the nature of specific transactions,
and is not required to solicit further authorization from Stockholders for any
specific issue of Preferred Stock. The Board of Directors has no present
intention to issue any series of Preferred Stock.
The Board of Directors has adopted a policy providing that no future
issuance of Preferred Stock will be effected without Stockholder approval
unless the Board of Directors (whose decision shall be conclusive) determines
in good faith (i) that such issuance is primarily for the purpose of
facilitating a financing, an acquisition or another proper corporate objective
or transaction, and (ii) that any anti-takeover effects of such issuance are
not the Company's primary purpose for effecting such issuance. The Board of
Directors will not amend or revoke this policy without giving written notice
to the holders of all outstanding shares of the Company's stock; however, no
such amendment or revocation will be effective, without Stockholder approval,
to permit a subsequent issuance of Preferred Stock for the primary purpose of
obstructing a takeover of the Company by any person who has, prior to such
written notice to stockholders, notified the Board of Directors of such
person's desire to pursue a takeover of the Company.
Rights to Purchase Common Stock
On December 8, 1995, the Board of Directors of Lyondell declared a dividend
of one right ("Right") for each outstanding share of the Company's Common
Stock, par value $1.00 per share, to Stockholders of record at the close of
business on December 20, 1995. Each Right entitles the registered holder to
purchase from the Company one share of Common Stock at a purchase price of $80
per share of Common Stock, subject to adjustment (the "Purchase Price"). The
description and terms of the Rights are set forth in a Rights Agreement dated
as of December 8, 1995 as it may from time to time be supplemented or amended
(the "Rights Agreement") between the Company and The Bank of New York, as
Rights Agent.
Initially, the Rights will be attached to all certificates representing
outstanding shares of Common Stock, and no separate certificates for the
Rights ("Rights Certificates") will be distributed. The Rights will separate
from the Common Stock and a "Distribution Date" will occur, with certain
exceptions, upon the earlier of (i) ten days following a public announcement
of the existence of an "Acquiring Person" (the date of the announcement being
the "Stock Acquisition Date"), or (ii) ten business days following the
commencement of a tender offer or exchange offer that would result in a person
becoming an Acquiring Person.
An "Acquiring Person" is any person or group of affiliated or associated
persons that has acquired or obtained the right to acquire beneficial
ownership of 15 percent or more of the outstanding shares of Common Stock,
except that ARCO will not be or become an Acquiring Person unless and until
such time as ARCO or any person affiliated or associated with ARCO acquires or
becomes the beneficial owner of (or ARCO becomes affiliated or associated with
any person who, collectively with ARCO, is the beneficial owner of) more than
the lesser of (i) 1,000,000 shares of Common Stock in addition to those ARCO
beneficially owned as of December 8, 1995 (or in addition to any lesser number
of shares ARCO beneficially owns from time to time thereafter) or (ii) one
share less than 50 percent of the shares of Common Stock outstanding at any
time.
In certain circumstances prior to the time a person has become an Acquiring
Person, the Distribution Date may be deferred by the Board of Directors.
Certain inadvertent acquisitions will not result in a person's becoming an
Acquiring Person if the person promptly divests itself of sufficient Common
Stock. Until the Distribution Date, (a) the Rights will be evidenced by the
Common Stock certificates (together with this Summary of Rights or bearing the
notation referred to below) and will be transferred with and only with such
Common Stock
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<PAGE>
certificates, (b) new Common Stock certificates issued after December 20, 1995
will contain a notation incorporating the Rights Agreement by reference and
(c) the surrender for transfer of any certificate for Common Stock (with or
without a copy of this Summary of Rights) will also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire at
the close of business on December 8, 2005, unless earlier redeemed or
exchanged by the Company as described below.
In the event (a "Flip-In Event") that a person becomes an Acquiring Person
(except pursuant to a tender or exchange offer for all outstanding shares of
Common Stock at a price and on terms that a majority of the independent
directors of the Company determines to be fair to and otherwise in the best
interests of the Company and its stockholders (a "Permitted Offer")), each
holder of a Right will thereafter have the right to receive, upon exercise of
such Right, a number of shares of Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a Current Market
Price (as defined in the Rights Agreement) equal to two times the exercise
price of the Right. Notwithstanding the foregoing, following the occurrence of
any Flip-In Event, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by or transferred
to such Acquiring Person (or by certain related parties) will be null and void
in the circumstances set forth in the Rights Agreement.
In the event (a "Flip-Over Event") that, at any time from and after the time
an Acquiring Person becomes such, (i) the Company is acquired in a merger or
other business combination transaction (other than certain mergers that follow
a Permitted Offer), or (ii) 50 percent or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except Rights
owned by such Acquiring Person or certain related parties) shall thereafter
have the right to receive, upon exercise, a number of shares of common stock
of the acquiring company having a Current Market Price equal to two times the
exercise price of the Right.
At any time until the time a person becomes an Acquiring Person, the Company
may redeem the Rights in whole, but not in part, at a price of $.0005 per
Right, payable, at the option of the Company, in cash, shares of Common Stock
or such other consideration as the Board of Directors may determine. At any
time after the occurrence of a Flip-In Event and prior to the occurrence of a
Flip-Over Event or a person becoming the beneficial owner of 50 percent or
more of the shares of Common Stock then outstanding, the Company may exchange
the Rights (other than Rights owned by an Acquiring Person or an affiliate or
an associate of an Acquiring Person, which will have become void), in whole or
in part, at an exchange ratio of one share of Common Stock, and/or other
equity securities deemed to have the same value as one share of Common Stock,
per Right, subject to adjustment.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights should not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights
become exercisable for Common Stock (or other consideration) of the Company or
for the common stock of the acquiring company as set forth above or are
exchanged as provided in the preceding paragraph.
The Purchase Price payable, and the number of shares of Common Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a
stock dividend on, or a subdivision, combination or reclassification of, the
Common Stock, (ii) if holders of the Common Stock are granted certain rights
or warrants to subscribe for Common Stock or securities convertible into
Common Stock at less than the current market price of the Common Stock or
(iii) upon the distribution to holders of the Common Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
Other than the redemption price, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company as long as
the Rights are redeemable. Thereafter, the provisions of the Rights Agreement
(other than the Redemption Price) may be amended by the Board of Directors in
order to cure any
11
<PAGE>
ambiguity, defect or inconsistency, to make changes that do not materially
adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to lengthen the time
period governing redemption or amendment shall be made at such time as the
Rights are not redeemable.
The Rights have certain antitakeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by its Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors at a time when the Rights are redeemable.
A copy of the Rights Agreement is filed as an exhibit to the Company's
Annual Report on Form 10-K. This summary description of the Rights is
qualified in its entirety by reference thereto.
Voting Rights
Each holder of shares of Common Stock, except where otherwise provided by
law or the Certificate of Incorporation, is entitled to one vote, in person or
by proxy, for each share of Common Stock standing in his, her or its name on
the books of the Company. The Common Stock does not have cumulative voting
rights. Holders of the Preferred Stock, if any, will only be entitled to vote
upon the election of directors or upon any questions affecting the Company if
and to the extent that the holders of any series of Preferred Stock are
granted voting rights fixed for such series by the Board of Directors in the
resolution creating such series.
Delaware Section 203
The Company is a Delaware corporation and is subject to Section 203 of the
General Corporation Law of Delaware ("Delaware Law"). In general, Section 203
prevents an "interested stockholder" (defined generally as a person owning 15%
or more of the Company's outstanding voting stock) from engaging in a
"business combination" (as defined in Section 203) with the Company for three
years following the date that person becomes an interested stockholder unless
(a) before that person became an interested stockholder, the Company's Board
of Directors approved the transaction in which the interested stockholder
became an interested stockholder or approved the business combination, (b)
upon completion of the transaction that resulted in the interested
stockholder's becoming an interested stockholder, the interested stockholder
owns at least 85% of the Company's voting stock outstanding at the time the
transaction commenced (excluding stock held by directors who are also officers
of the Company and by employee stock plans that do not provide employees with
the right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer) or (c) following the
transaction in which that person became an interested stockholder, the
business combination is approved by the Company's Board of Directors and
authorized at a meeting of stockholders by the affirmative vote of the holders
of at least two-thirds of the outstanding Company voting stock not owned by
the interested stockholder.
Under Section 203, these restrictions also do not apply to certain business
combinations proposed by an interested stockholder following the announcement
or notification of one of certain extraordinary transactions involving the
Company and a person who was not an interested stockholder during the previous
three years or who became an interested stockholder with the approval of a
majority of the Company's directors, if that extraordinary transaction is
approved or not opposed by a majority of the directors who were directors
before any person became an interested stockholder in the previous three years
or who were recommended for election or elected to succeed such directors by a
majority of such directors then in office.
Limitation on Directors' Liability
Delaware Law authorizes corporations to limit or eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of directors' fiduciary duty of care. The Certificate of
Incorporation limits the liability of directors of the Company to the Company
or its stockholders to the fullest
12
<PAGE>
extent permitted by Delaware Law. Specifically, directors of the Company will
not be personally liable for monetary damages for breach of a director's
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the Delaware
Law or (iv) for any transaction from which the director derived an improper
personal benefit.
The inclusion of this provision in the Certificate of Incorporation may have
the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter stockholders or management from bringing
a lawsuit against directors for breach of their duty of care, even though such
an action, if successful, might otherwise have benefited the Company and its
stockholders.
Provisions of the Company's By-Laws
Certain provisions of the By-Laws establish time periods during which
appropriate stockholder proposals must be delivered to the Company for
consideration at special and annual meetings called by the Company. The By-
Laws provide, among other things, that stockholders making nominations for the
Board of Directors at, or bringing other business before, an annual or special
meeting of stockholders must provide timely written notice to the Company
thereof (timely notice being required to be no later than 90 days in advance
of such meeting; provided, however, that in the event that the date of the
meeting was not publicly announced by a mailing to stockholders, in a press
release reported by the Dow Jones News Services, Associated Press or
comparable national news service or in a filing with the Securities and
Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities
Exchange Act of 1934 more than 90 days prior to the meeting, such notice, to
be timely, must be delivered to the Board of Directors not later than the
close of business on the tenth day following the day on which the date of the
meeting was first so publicly announced).
Limitation on Changes in Control
The Rights and Rights Agreement, certain provisions of the Company's By-Laws
and the provisions of Section 203 of Delaware Law could have the effect of
delaying, deferring or preventing a change in control of the Company. This
could be the case, notwithstanding that a majority of the stockholders might
benefit from such a change in control or offer.
MARKET FOR COMMON STOCK AND COMMON STOCK DIVIDENDS
The Common Stock is listed on the New York Stock Exchange under the symbol
"LYO." The reported high and low sale prices of the Common Stock on the New
York Stock Exchange (New York Stock Exchange Composite Tape) for each quarter
from January 1, 1997 through March 31, 1999, inclusive, were as set forth
below.
<TABLE>
<CAPTION>
Period High Low
------ ---- ---
<S> <C> <C>
1997:
First Quarter....................................... 25 1/2 21 5/8
Second Quarter...................................... 23 5/8 18 3/8
Third Quarter....................................... 27 3/8 21 7/8
Fourth Quarter...................................... 27 1/4 23 15/16
1998:
First Quarter....................................... 36 1/8 23 1/4
Second Quarter...................................... 38 1/8 26 1/2
Third Quarter....................................... 30 15/16 19 7/16
Fourth Quarter...................................... 22 7/16 15
1999:
First Quarter (through March 31, 1999).............. 18 1/4 12 11/16
</TABLE>
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<PAGE>
During the last thirteen quarters, Lyondell has declared $.225 per share
quarterly cash dividends (which were paid in the subsequent quarter). The
declaration and payment of dividends is at the discretion of the Board of
Directors. The future declaration and payment of dividends and the amount
thereof will be dependent upon the Company's results of operations, financial
condition, cash position and requirements, investment opportunities, future
prospects and other factors deemed relevant by the Board of Directors. Subject
to these considerations and to the legal considerations discussed in the
following paragraph, the Company currently intends to distribute to its
Stockholders cash dividends on its Common Stock at a quarterly rate of $.225
per share. During 1998, the Company paid $70 million in dividends. During the
first quarter of 1999, the Company paid $17 million in dividends.
Certain debt instruments which were assumed by Equistar, but as to which
Lyondell remains an obligor as well, contain the Put Rights provisions. Among
other things, the Put Rights may be triggered by the making by either of
Lyondell or Equistar of certain unearned distributions to stockholders or
partners, respectively, other than regular dividends, that are followed by a
specified decline in public ratings on such debt. Regular dividends are those
quarterly cash dividends determined in good faith by the Board of Directors
(whose determination is conclusive) to be appropriate in light of the
Company's results of operations and capable of being sustained. Lyondell's
credit facilities also could limit the Company's ability to pay dividends
under certain circumstances.
The operation of certain of the Company's employee benefit plans may result
in the issuance of Common Stock upon the exercise of options granted to
employees of the Company, including its officers. Although the terms of these
plans provide that additional shares may be issued to satisfy the Company's
obligations under the options, the Company generally intends to cause Common
Stock to be repurchased in the market in order to satisfy these obligations.
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<PAGE>
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which any Prospectus Supplement
may relate (the "Offered Debt Securities"). The particular terms of the
Offered Debt Securities and the extent to which such general provisions may
apply will be described in a Prospectus Supplement relating to such Offered
Debt Securities.
The Debt Securities will be general unsecured obligations of the Company and
will constitute either senior debt securities or subordinated debt securities.
In the case of Debt Securities that will be senior debt securities ("Senior
Debt Securities"), such Debt Securities will be issued under an Indenture (the
"Senior Indenture") between the Company and a trustee under the Senior
Indenture (the "Senior Trustee"), and will rank pari passu with all other
unsecured and unsubordinated debt of the Company. In the case of Debt
Securities that will be subordinated debt securities ("Subordinated Debt
Securities"), such Debt Securities will be issued under an Indenture (the
"Subordinated Indenture") between the Company and a trustee under the
Subordinated Indenture (the "Subordinated Trustee"), and will rank junior to
all Senior Indebtedness (as defined below) of the Company (including any
Senior Debt Securities) that may be outstanding from time to time. The Senior
Indenture and the Subordinated Indenture are sometimes hereinafter referred to
individually as an "Indenture" and collectively as the "Indentures," and the
Senior Trustee and the Subordinated Trustee are sometimes hereinafter referred
to individually as a "Trustee" and collectively as the "Trustees."
The following description does not purport to be complete. It is qualified
in its entirety by reference to the text of the Form of Senior Indenture and
the Form of Subordinated Indenture, copies of which are filed as exhibits to
this Registration Statement and may be inspected in the same manner as set
forth under "Available Information." Certain defined terms in the Indentures
are capitalized herein.
Provisions Applicable to Both Senior and Subordinated Debt Securities
General
The Indentures do not limit the aggregate principal amount of Debt
Securities that can be issued thereunder and provide that Debt Securities may
be issued from time to time thereunder in one or more series, each in an
aggregate principal amount authorized by the Company prior to issuance. The
Indentures do not limit the amount of other unsecured indebtedness or
securities that may be issued by the Company.
Unless otherwise indicated in a Prospectus Supplement, the Debt Securities
will not benefit from any covenant or other provision that would afford
Holders of such Debt Securities special protection in the event of a highly
leveraged transaction involving the Company or that would give holders of the
Debt Securities the right to require the Company to repurchase their
securities in the event of a decline in the credit rating of the Company's
debt securities resulting from a takeover, recapitalization or similar
restructuring or otherwise.
Reference is made to the Prospectus Supplement for the following terms of
the Offered Debt Securities: (i) the title and aggregate principal amount of
the Offered Debt Securities; (ii) whether such Offered Debt Securities will be
issued in the form of one or more global securities and whether such global
securities are to be issuable in temporary global form or permanent global
form, and if so, whether beneficial owners of interests in any such global
security may exchange such interests for physical securities, and the initial
depositary for any global security; (iii) the date or dates on which the
principal of and premium, if any, on the Offered Debt Securities are payable
or the method of determination thereof; (iv) the rate or rates, or the method
of determination thereof, at which the Offered Debt Securities will bear
interest, if any; (v) whether and under what circumstances Additional Amounts
with respect to the Offered Debt Securities will be payable; (vi) the date or
dates from which such interest will accrue; (vii) the interest Payment Dates
on which such interest will be payable and the record date for the interest
payable on any Offered Debt Securities on any Interest Payment Date; (viii)
the Person to whom any interest on the Offered Securities will be payable;
(ix) the place or places where the principal of, premium
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(if any) and interest and any Additional Amounts with respect to the Offered
Debt Securities will be payable; (x) the period or periods within which, the
price or prices at which and the terms and conditions upon which Offered Debt
Securities may be redeemed, in whole or in part, at the option of the Company,
if the Company is to have that option; (xi) the obligation, if any, of the
Company to redeem, purchase or repay Offered Debt Securities pursuant to any
sinking fund or analogous provisions or at the option of a holder thereof and
the period or periods within which, the price or prices (whether denominated
in cash, securities or otherwise) at which and the terms and conditions upon
which Offered Debt Securities will be redeemed, purchased or repaid in whole
or in part pursuant to such obligation; (xii) if other than denominations of
$1,000 and any integral multiple thereof, the denomination in which the
Offered Debt Securities will be issuable; (xiii) the currency or currencies
(including composite currencies), if other than U.S. dollars, in which payment
of principal, premium (if any) and interest on and any Additional Amounts with
respect to the Offered Debt Securities will be payable; (xiv) if such payments
are to be payable, at the election of the Company or a holder thereof, in a
currency or currencies (including composite currencies) other than that in
which the Offered Debt Securities are stated to be payable, the currency or
currencies (including composite currencies) in which such payments as to which
such election is made will be payable, and the periods within which and the
terms and conditions upon which such election is to be made; (xv) if the
amount of such payments may be determined with reference to any commodities,
currencies or indices, values, rates or prices or any other index or formula,
the manner in which such amounts will be determined; (xvi) if other than the
entire principal amount thereof, the portion of the principal amount of
Offered Debt Securities that will be payable upon declaration of acceleration
of the maturity thereof; (xvii) any additional means of satisfaction and
discharge of the applicable Indenture and any additional conditions or
limitations to discharge with respect to the Offered Debt Securities pursuant
to the applicable Indenture or any modifications of or deletions from such
conditions or limitations; (xviii) any deletions or modifications of or
additions to the Events of Default or covenants of the Company pertaining to
the Offered Debt Securities; (xix) any restrictions or other provisions with
respect to the transfer or exchange of Offered Debt Securities; (xx) if the
Offered Debt Securities are to be convertible into or exchangeable for Capital
Stock, other debt securities (including Debt Securities), warrants, other
equity securities or any other securities or property of the Company or any
other Person, at the option of the Company or the holder or upon the
occurrence of any condition or event, the terms and conditions for such
conversion or exchange; and (xxi) any other terms of the Offered Debt
Securities.
The Debt Securities will be issued in registered form. No service charge
will be made for any registration of transfer or exchange of the Debt
Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Substantially all of the Company's operating income and cash flow is
generated by its subsidiaries and joint ventures. As a result, funds necessary
to meet the Company's debt service obligations are provided in part by
distributions or advances from its subsidiaries and joint ventures. Under
certain circumstances, contractual and legal restrictions, as well as the
financial condition and operating requirements of the Company's subsidiaries
and joint ventures, could limit the Company's ability to obtain cash from its
subsidiaries and joint ventures for the purpose of meeting its debt service
obligations, including the payment of principal and interest on Debt
Securities. The claims of creditors of the subsidiaries and joint ventures
will effectively have priority with respect to the assets and earnings of such
companies over the claims of creditors of the Company, including the holders
of Debt Securities.
Offered Debt Securities may be sold at a discount (which may be substantial)
below their stated principal amount bearing no interest or interest at a rate
that at the time of issuance is below market rates. Any material United States
federal income tax consequences and other special considerations applicable
thereto will be described in the Prospectus Supplement relating to any such
Offered Debt Securities.
If any of the Offered Debt Securities are sold for any foreign currency or
currency unit (including a composite currency) or if the principal, premium
(if any) or interest on or any Additional Amounts with respect to any of the
Offered Debt Securities is payable in any foreign currency or currency unit,
the restrictions,
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elections, tax consequences, specific terms and other information with respect
to such Offered Debt Securities and such foreign currency or currency unit
will be set forth in the Prospectus Supplement relating thereto.
Consolidation, Merger and Sale of Assets
The Indentures provide that the Company will not, in any transaction or
series of transactions, consolidate with or merge into any Person, or sell,
lease, convey, transfer or otherwise dispose of all or substantially all of
its assets to any Person, unless: (i) either (a) the Company shall be the
continuing corporation or (b) the Person (if other than the Company) formed by
such consolidation or into which the Company is merged, or to which such sale,
lease, conveyance, transfer or other disposition shall be made, is organized
and validly existing under the laws of the United States of America, any
political subdivision thereof or any state thereof or the District of
Columbia, and shall expressly assume, by a supplemental indenture, the due and
punctual payment of the principal of (and premium, if any) and interest on and
Additional Amounts with respect to all the Debt Securities and the performance
of the Company's covenants and obligations under such Indenture and the Debt
Securities; (ii) immediately after giving effect to such transaction or series
of transactions, no default or Event of Default shall have occurred and be
continuing or would result therefrom; (iii) the Company delivers to the
Trustee an officer's certificate and an Opinion of Counsel, each stating that
the transaction and such supplemental indenture comply with the applicable
Indenture and (iv) the Company complies with any provisions provided for with
respect to any series of Debt Securities.
Events of Default
Unless otherwise provided with respect to any series of Debt Securities, the
following are Events of Default under each Indenture with respect to the Debt
Securities of such series issued under such Indenture: (i) default by the
Company for 30 days in payment of any interest or any Additional Amounts with
respect to any Debt Securities of such series; (ii) default by the Company in
the payment of (a) any principal of any Debt Securities of such series at its
maturity or (b) premium (if any) on any Debt Securities of such series when
the same becomes due and payable; (iii) default by the Company for 30 days in
the deposit of any sinking fund payment, when and as due by the terms of a
Debt Security of such series; (iv) default by the Company in compliance with
any of its other covenants or agreements in, or provisions of, the Debt
Securities of such series or the applicable Indenture (other than an
agreement, covenant or provision that has expressly been included in such
Indenture solely for the benefit of one or more series of Debt Securities
other than that series) which shall not have been remedied within 90 days
after written notice by the Trustee or by the holders of at least 25% in
principal amount of the then outstanding Debt Securities affected by such
default; (v) certain events involving bankruptcy, insolvency or reorganization
of the Company; and (vi) any other Event of Default provided with respect to
Debt Securities of that series. The Indentures provide that the Trustee may
withhold notice to the holders of the Debt Securities of any default or Event
of Default (except in payment of principal of, premium (if any) and interest
on any Additional Amounts or any sinking fund installment with respect to Debt
Securities of such series) if the Trustee considers it in the interest of the
holders of such Debt Securities to do so.
Each Indenture provides that if an Event of Default with respect to any Debt
Securities of any series at the time outstanding occurs and is continuing
(other than the event of default pursuant to (v) above), the applicable
Trustee or the holders of at least 25% in principal amount of the then
outstanding Debt Securities of the series affected by such default (or in the
event of a default pursuant to (iv) above, 25% in principal amount of the
securities affected) may declare the principal of and accrued and unpaid
interest on all then outstanding Debt Securities of such series or of all
series affected, as the case may be, to be due and payable. Upon such a
declaration, the amounts due and payable on such Debt Securities will be due
and payable immediately. If an event of default pursuant to (v) above occurs,
then the principal of and accrued and unpaid interest on all then outstanding
Debt Securities shall ipso facto become immediately due and payable without
any declaration, notice or other act on the part of the Trustee or any holder.
Under certain circumstances, the holders of a majority in principal amount of
the outstanding Debt Securities of the series affected by such default or all
series, as the case may be, may rescind any such acceleration and its
consequences.
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Each Indenture provides that no holder of a Debt Security of any series may
pursue any remedy under such Indenture unless (i) the holder gives the
applicable Trustee written notice of a continuing Event of Default with
respect to such series, (ii) the holders of at least 25% in principal amount
of the then outstanding Debt Securities of such series make a written request
to the applicable Trustee to pursue such remedy, (iii) such holder or holders
offer to the applicable Trustee indemnity reasonably satisfactory to such
Trustee, (iv) the Trustee shall have failed to act for a period of 60 days
after receipt of such notice and offer of indemnity and (v) during such 60-day
period, the holders of a majority in principal amount of the Debt Securities
of that series do not give such Trustee a direction inconsistent with the
request; however, such provision does not affect the right of a holder of a
Debt Security to sue for enforcement of any overdue payment thereon.
Each Indenture provides that the holders of a majority in principal amount
of the then outstanding Debt Securities of a series or of all series affected,
as the case may be, may direct the time, method and place of conducting any
proceeding for any remedy available to the applicable Trustee or exercising
any trust or power conferred on it not relating to or arising under an Event
of Default, subject to certain limitations specified in such Indenture. Each
Indenture requires the annual filing by the Company with the applicable
Trustee of a written statement as to compliance with the covenants contained
in such Indenture.
Modification and Waiver
Modifications and amendments of each Indenture or the Debt Securities may be
made by the Company and the applicable Trustee with the consent of the Holders
of a majority in principal amount of the outstanding Debt Securities of all
series affected by such amendment (acting as one class) under the applicable
Indenture; provided, however, that no such modification, amendment, supplement
or waiver may, without the consent of each Holder of any outstanding Debt
Security so affected, (i) reduce the amount of Debt Securities whose holders
must consent to an amendment, supplement or waiver; (ii) reduce the rate of or
change the time for payment of interest, including default interest, on any
Debt Security; (iii) reduce the principal of or premium on, or change the
stated maturity of any Debt Security; (iv) reduce the premium, if any, payable
upon the redemption of any Debt Security or change the time at which any Debt
Security may or shall be redeemed; (v) change any obligation of the Company to
pay Additional Amounts with respect to any Debt Security; (vi) make any Debt
Security payable in money other than that stated in the Debt Security; (vii)
impair the right to institute suit for the enforcement of any payment of
principal of, premium (if any) or interest on or any Additional Amounts with
respect to any Debt Security; (vii) make any change in the percentage of
principal amount of Debt Securities necessary to waive compliance with certain
provisions of the applicable Indenture; or (viii) waive a continuing Default
or Event of Default in the payment of principal of, premium (if any) or
interest on or Additional Amounts with respect to the Debt Securities. In
addition, in the case of the Subordinated Debt Securities, no modification or
amendment may be made to the Subordinated Indenture with respect to the
subordination of any Subordinated Debt Security in a manner adverse to the
Holder thereof without the consent of the Holder of each Subordinated Debt
Security then outstanding affected thereby. The Indentures provide that
amendments and supplements to, or waivers of any provision of, such Indenture
may be made by the Company and the Trustee without the consent of any holders
of Debt Securities in certain circumstances, including, among other things,
(a) to cure any ambiguity, omission, defect or inconsistency, (b) to provide
for the assumption of the obligations of the Company under such Indenture upon
the merger, consolidation or sale or other disposition of all or substantially
all of the assets of the Company, (c) to provide for uncertificated Debt
Securities in addition to or in place of certificated Debt Securities, or to
provide for the issuance of bearer Debt Securities (with or without coupons),
(d) to secure any series of Debt Securities or to add guarantees of any series
of Debt Securities, (e) to comply with any requirement in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act of
1939 or (f) to make any change that does not adversely affect any outstanding
Debt Securities of any series in any material respect.
The Indentures provide that the Holders of a majority in principal amount of
the then outstanding Debt Securities of any series or of all series (acting as
one class) may waive any existing or past default or Event of Default with
respect to such series or all series, as the case may be, except (a) in the
payment of the principal of,
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or premium (if any) or interest on or any Additional Amounts with respect to
any Debt Securities or (b) in respect of a provision that under the proviso to
the prior paragraph cannot be amended or supplemented without the consent of
each Holder affected.
Defeasance
The Indentures provide that the Company may, at its option, elect (a) to
have all of the obligations of the Company discharged with respect to the Debt
Securities (except for certain obligations to register the transfer or
exchange of Debt Securities, replace stolen, lost or mutilated Debt Securities
or maintain paying agencies and hold moneys for payment in trust) ("legal
defeasance") or (b) to have its obligations terminated with respect to certain
restrictive covenants of the Indenture ("covenant defeasance"), in which event
certain Events of Default will no longer constitute Events of Default with
respect to any Debt Securities, upon the deposit with the Trustee, in trust,
of money or U.S. Government Obligations, or a combination thereof, which
through the payment of interest thereon and principal thereof in accordance
with their terms will provide money in an amount sufficient to pay all the
principal of (and premium, if any, on) and interest on such Debt Securities on
the dates such payments are due in accordance with the terms of the Debt
Securities on their stated maturity or any redemption date. The Company is
required to deliver to the Trustee an Opinion of Counsel to the effect that
the deposit and related defeasance would not cause the Holders of the Debt
Securities to recognize income, gain or loss for federal income tax purposes
and, in the case of a legal defeasance pursuant to clause (a), such opinion
must be based upon a ruling from the United States Internal Revenue Service or
a change in law to that effect.
Governing Law
Each Indenture and the Debt Securities will be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
applicable principles of conflicts of laws to the extent the laws of another
jurisdiction would be required thereby.
Trustees
Each Indenture contains certain limitations on the right of the applicable
Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases, or to realize on certain property received in respect
of any such claim, as security or otherwise. Each Trustee is permitted to
engage in other transactions; however, if it acquires any conflicting interest
(as defined), it must eliminate such conflict or resign.
Form, Exchange, Registration and Transfer
Debt Securities of any series will be exchangeable for other Debt Securities
of the same series and of a like aggregate principal amount and tenor of
different authorized denominations in accordance with the applicable
Indenture. Debt Securities may be presented for registration of transfer (with
the form of transfer endorsed thereon duly executed), at the office of the
Security Registrar or at the office of any transfer agent designated by the
Company for such purpose with respect to any series of Debt Securities and
referred to in an applicable Prospectus Supplement, without service charge and
upon payment of any taxes and other governmental charges as described in the
applicable Indenture. Such transfer or exchange will be effected upon the
Security Registrar or such transfer agent, as the case may be, being satisfied
with the documents of title and identity of the Person making the request. The
Company has appointed the Trustee under each Indenture as Security Registrar
for Debt Securities issued thereunder. If a Prospectus Supplement refers to
any transfer agents (in addition to the Security Registrar) initially
designated by the Company with respect to any series of Debt Securities, the
Company may at any time rescind the designation of any such transfer agent or
approve a change in the location through which any such transfer agent acts.
The Company is required to maintain an office or agency (which may be the
office of the Trustee, the Security Registrar or the Paying Agent) in each
Place of Payment for such series. The Company may at any time designate
additional transfer agents with respect to any series of Debt Securities.
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In the event of any redemption in part, the Company shall not be required to
(i) register the transfer or exchange of any Debt Security of any series
during a period beginning 15 Business Days prior to the mailing of the
relevant notice of redemption and ending on the close of business on the day
of mailing of such notice or (ii) register the transfer of or exchange any
Debt Security called for redemption in whole or in part, except the unredeemed
portion of any Debt Security being redeemed in part.
Payment and Paying Agents
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal, premium (if any) and interest on and any Additional Amounts with
respect to Debt Securities will be made in dollars at the office of the
applicable Trustee, except that, at the option of the Company, payment of such
amounts may be made by check mailed to the holder's registered address or,
with respect to Global Debt Securities, by wire transfer. Unless otherwise
indicated in an applicable Prospectus Supplement, payment of any installment
of interest (except defaulted interest) on Debt Securities will be made to the
Person in whose name such Debt Security is registered at the close of business
on the record date next preceding the Interest Payment Date for such interest.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Trustee will be designated as a Paying Agent for the Company for payments with
respect to Debt Securities issued under the applicable Indenture. The Company
may at any time designate additional Paying Agents or rescind the designation
of any Paying Agent or approve a change in the office through which any Paying
Agent acts.
Subject to the requirements of any applicable abandoned property laws, each
Trustee and Paying Agent shall pay to the Company upon written request any
money held by them for the payment of principal, premium (if any), interest or
any Additional Amounts that remain unclaimed for two years after the date upon
which such payment shall have become due. After payment to the Company,
Holders entitled to the money must look to the Company for payment as general
creditors unless an applicable abandoned property law designates another
Person, and all liability of such Trustee or Paying Agent with respect to such
money shall cease.
Book-Entry Debt Securities
The Debt Securities of a series may be issued, in whole or in part, in the
form of one or more global Debt Securities that would be deposited with a
depositary or its nominee identified in the applicable Prospectus Supplement.
Global Debt Securities may be issued in either temporary or permanent form.
The specific terms of any depositary arrangement with respect to any portion
of a series of Debt Securities and the rights of, and limitations on, owners
of beneficial interests in any such global Debt Security representing all or a
portion of a series of Debt Securities will be described in the applicable
Prospectus Supplement.
Provisions Applicable Solely to Subordinated Debt Securities
The payment of the principal of, premium, if any, and interest on and any
Additional Amounts with respect to the Subordinated Debt Securities is
expressly subordinated, to the extent and in the manner set forth in the
Subordinated Indenture and described in a Prospectus Supplement relating to
any series of Subordinated Debt Securities, to the prior payment in full of
all Senior Indebtedness of the Company. Unless otherwise indicated in an
applicable Prospectus Supplement relating to any series of Subordinated Debt
Securities, the following is a description of the Subordinated Debt Securities
and the Subordinated Indenture.
Unless otherwise provided with respect to Subordinated Debt Securities of a
series and described in a Prospectus Supplement, the Subordinated Indenture
provides that no payment may be made by or on behalf of the Company on account
of the principal of, premium, if any, or interest on or any Additional Amounts
with respect to the Subordinated Debt Securities, or to acquire any of the
Subordinated Debt Securities (including repurchases of Subordinated Debt
Securities at the option of the Holder thereof) for cash or property (other
than certain junior securities of the Company), or on account of the
redemption provisions of the Subordinated Debt Securities, in the event of (i)
default in the payment of any principal of, premium, if any, or interest on
any Senior Indebtedness of the Company when it becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise (a "Payment Default"), unless and until such Payment Default has
been cured or waived or otherwise has ceased to exist, or (ii) any other event
of default with respect to any
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Designated Senior Indebtedness permitting the holders of such Designated
Senior Indebtedness (or a trustee or other representative on behalf of the
holders thereof) to declare such Designated Senior Indebtedness due and
payable prior to the date on which it would otherwise have become due and
payable, upon written notice thereof to the Company and the Subordinated
Trustee by any holders of such Designated Senior Indebtedness (or a trustee or
other representative on behalf of the holders thereof) (the "Payment Blockage
Notice"), unless and until such event of default shall have been cured or
waived or otherwise has ceased to exist, provided that such payments may not
be prevented under clause (ii) above for more than 179 days after an
applicable Payment Blockage Notice has been received by the Subordinated
Trustee unless the Designated Senior Indebtedness in respect of which such
event of default exists has been declared due and payable in its entirety, in
which case no such payment may be made until such acceleration has been
rescinded or annulled or such Designated Senior Indebtedness has been paid in
full. In the case of (ii) above, no event of default that existed or was
continuing on the date of any Payment Blockage Notice (whether or not such
event of default is on the same issue of Designated Senior Indebtedness) may
be made the basis for the giving of a second Payment Blockage Notice, and only
one such Payment Blockage Notice may be given in any 360-day period.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company (other than certain junior securities of
the Company or from the trust described under "Defeasance") is received by the
Subordinated Trustee or the Holders of Subordinated Debt Securities at a time
when such payment or distribution is prohibited by the foregoing provisions,
then, unless such payment or distribution is no longer prohibited by the
foregoing provisions, such payment or distribution shall be received and held
in trust by the Subordinated Trustee or such Holders or the Paying Agent for
the benefit of the holders of Senior Indebtedness of the Company, and shall be
paid or delivered by the Subordinated Trustee or such Holders or the Paying
Agent, as the case may be, to the holders of the Senior Indebtedness of the
Company remaining unpaid or unprovided for or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness of the Company may
have been issued, ratably according to the aggregate amounts remaining unpaid
on account of the Senior Indebtedness of the Company held or represented by
each, for application to the payment of all Senior Indebtedness in full after
giving effect to any concurrent payment or distributions to or for the holders
of such Senior Indebtedness.
Upon any distribution of assets of the Company or upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors, (i) the
holders of all Senior Indebtedness of the Company will first be entitled to
receive payment in full before the Holders of Subordinated Debt Securities are
entitled to receive any payment on account of the principal of, premium, if
any, and interest on or any Additional Amounts with respect to the
Subordinated Debt Securities (other than certain junior securities of the
Company or from the trust described under "Defeasance") and (ii) any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities (other than certain junior securities of the
Company or from the trust described under "Defeasance") to which the Holders
of Subordinated Debt Securities or the Subordinated Trustee on behalf of such
Holders would be entitled, except for the subordination provisions contained
in the Subordinated Indenture, will be paid by the liquidating trustee or
agent or other person making such a payment or distribution directly to the
holders of Senior Indebtedness of the Company or their representative, ratably
according to the respective amounts of Senior Indebtedness held or represented
by each, to the extent necessary to make payment in full of all such Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment
or distributions to the holders of such Senior Indebtedness.
No provision contained in the Subordinated Indenture or the Subordinated
Debt Securities affects the obligation of the Company, which is absolute and
unconditional, to pay, when due, principal of, premium, if any, and interest
on and any Additional Amounts with respect to the Subordinated Debt
Securities. The subordination provisions of the Subordinated Indenture and the
Subordinated Debt Securities do not prevent the occurrence of any default or
Event of Default under the Subordinated Indenture or limit the rights of the
Subordinated Trustee or any Holder of Subordinated Debt Securities, subject to
the two preceding paragraphs, to pursue any other rights or remedies with
respect to the Subordinated Debt Securities.
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As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors of the Company or
any of its subsidiaries or joint ventures or a marshaling of assets or
liabilities of the Company and its subsidiaries and joint ventures, Holders of
Subordinated Debt Securities may receive ratably less than other creditors.
The term "Senior Indebtedness" of the Company, unless otherwise provided
with respect to the Subordinated Debt Securities of a series and described in
the Prospectus Supplement relating thereto, is defined in the Subordinated
Indenture as (i) all Indebtedness and other monetary obligations (including
expenses and fees) under the Credit Agreement dated as of July 23, 1998 (the
"Existing Credit Facility") among the Company, the lenders and agents party
thereto, DLJ Capital Funding, Inc., as Syndication Agent, and Morgan Guaranty
Trust Company of New York, as Administrative Agent, as such agreement may be
amended, restated, supplemented or otherwise modified from time to time, and
(ii) all other Indebtedness, unless, by the terms of the instrument creating
or evidencing such Indebtedness, it is provided that such Indebtedness is not
superior in right of payment to the Subordinated Debt Securities or to other
Indebtedness which is pari passu with or subordinated to the Subordinated Debt
Securities, and (iii) all interest on any Indebtedness referred to in clause
(i) and (ii) accruing during the pendency of any bankruptcy or insolvency
proceeding whether or not allowed or allowable thereunder; provided that in no
event shall "Senior Indebtedness" include (a) Indebtedness of the Company owed
or owing to any subsidiary or joint venture of the Company or any officer,
director or employee of the Company or any subsidiary or joint venture of the
Company, (b) Indebtedness to trade creditors, (c) any debt securities and
guarantees issued to any trust, partnership or other entity affiliated with
the Company which is a financing vehicle of the Company in connection with the
issuance of preferred securities by such financing entity, (d) any
Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of the Bankruptcy Code, is without recourse to the Company,
(e) any Indebtedness of the Company, to the extent not permitted to be
incurred by the Indenture or (f) any liability for taxes owed or owing by the
Company.
The term "Designated Senior Indebtedness," unless otherwise provided with
respect to the Subordinated Debt Securities of a series and described in the
Prospectus Supplement relating thereto, is defined in the Subordinated
Indenture to mean (A) Indebtedness and other monetary obligations (including
expenses and fees) under the Existing Credit Facility and (B) any other Senior
Indebtedness of the Company that (i) in the instrument evidencing the same or
the assumption or guarantee thereof (or related documents to which the Company
is a party) is expressly designated as "Designated Senior Indebtedness" for
purposes of the Subordinated Indenture and (ii) satisfies such other
conditions as may be provided with respect to the Subordinated Debt Securities
of such series (provided that such instruments or documents may place
limitations and conditions on the rights of the holders of such Senior
Indebtedness to exercise the rights of Designated Senior Indebtedness).
The term "Indebtedness," unless otherwise provided with respect to the
Subordinated Debt Securities of a series and described in the Prospectus
Supplement relating thereto, is defined in the Subordinated Indenture to mean,
without duplication, (i) all indebtedness of such Person for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
such Person or only to a portion thereof), (ii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (or reimbursement obligations with respect thereto), other than
standby letters of credit, performance bonds and other obligations issued by
or for the account of such Person in the ordinary course of business, to the
extent not drawn or, to the extent drawn, if such drawing is reimbursed not
later than the third Business Day following demand for reimbursement, (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services, except trade payables and accrued expenses incurred in
the ordinary course of business, (v) all Capitalized Lease Obligations of such
Person, (vi) all Indebtedness of others secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person (provided
that if the obligations so secured have not been assumed in full by such
Person or are not otherwise such Person's legal liability in full, then such
obligations shall be
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deemed to be in an amount equal to the greater of (a) the lesser of (1) the
full amount of such obligations and (2) the fair market value of such assets,
as determined in good faith by the Board of Directors of such Person, which
determination shall be evidenced by a Board Resolution, and (b) the amount of
obligations as have been assumed by such Person or which are otherwise such
Person's legal liability), and (vii) all Indebtedness of others (other than
endorsements in the ordinary course of business) guaranteed by such Person to
the extent of such guarantee.
If Subordinated Debt Securities are issued under the Subordinated Indenture,
the aggregate principal amount of Senior Indebtedness outstanding as of a
recent date will be set forth in the Prospectus Supplement. The Subordinated
Indenture does not restrict the amount of Senior Indebtedness that the Company
may incur.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities in any of three ways (or in any
combination thereof): (i) through underwriters or dealers; (ii) directly to a
limited number of purchasers or to a single purchaser; or (iii) through
agents. The Prospectus Supplement with respect to any Offered Securities will
set forth the terms of the offering of such Offered Securities, including the
name or names of any underwriters, dealers or agents and the respective
amounts of such Offered Securities underwritten or purchased by each of them,
the initial public offering price of such Offered Securities and the proceeds
to the Company from such sale, any discounts, commissions or other items
constituting compensation from the Company and any discounts, commissions or
concessions allowed or reallowed or paid to dealers and any securities
exchanges on which such Offered Securities may be listed. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid
to dealers may be changed from time to time.
If underwriters are used in the sale of any Offered Securities, such Offered
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. Such Offered Securities may be either offered to the
public through underwriting syndicates represented by managing underwriters,
or directly by underwriters. Unless otherwise set forth in the Prospectus
Supplement, the obligations of the underwriters to purchase such Offered
Securities will be subject to certain conditions precedent and the
underwriters will be obligated to purchase all of such Offered Securities if
any are purchased.
Offered 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 Offered 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
underwriters, dealers or agents to solicit offers by certain purchasers to
purchase Offered 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.
Agents and underwriters 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 and/or
any of its affiliates in the ordinary course of business.
In connection with the offering, the underwriters or agents, as the case may
be, may purchase and sell the Offered Securities in the open market. These
transactions may include overallotment and stabilizing transactions and
purchases to cover syndicate short positions created in connection with the
offering. Stabilizing transactions
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<PAGE>
consist of certain bids or purchases for the purpose of preventing or
retarding a decline in the market price of the Offered Securities; and
syndicate short positions involve the sale by the underwriters or agents, as
the case may be, of a greater number of Offered Securities than they are
required to purchase from the Company in the offering. The underwriters may
also impose a penalty bid, whereby selling concessions allowed to syndicate
members or other broker-dealers for the Offered Securities sold for their
account may be reclaimed by the syndicate if such Offered Securities are
repurchased by the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
Offered Securities, which may be higher than the price that might otherwise
prevail in the open market, and, if commenced, may be discontinued at any
time. These transactions may be effected on the New York Stock Exchange, in
the over-the-counter market or otherwise.
The Securities may or may not be listed on a national securities exchange.
No assurances can be given that there will be a market for the Securities.
Certain persons participating in any offering of Securities may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Securities offered, including, among others, overallotment, stabilizing and
short-covering transactions in such Securities, and the imposition of a
penalty bid, in connection with any offering of Securities. For a description
of these activities, see "Plan of Distribution" or "Underwriting" in the
relevant Prospectus Supplement.
LEGAL MATTERS
Certain legal matters in connection with the Securities offered hereby will
be passed upon for the Company by Baker & Botts, L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements of Lyondell Chemical Company as of
December 31, 1998 and 1997 and for each of the three years in the period ended
December 31, 1998 incorporated in this prospectus by reference to Lyondell
Chemical Company's Annual Report on Form 10-K for the year ended December 31,
1998 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The financial statements of Equistar Chemicals, LP as of December 31, 1998
and 1997 and for the year ended December 31, 1998 and the period from December
1, 1997 (inception) to December 31, 1997 incorporated in this prospectus by
reference to Lyondell Chemical Company's Annual Report on Form 10-K for the
year ended December 31, 1998 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The financial statements of LYONDELL-CITGO Refining LP as of December 31,
1998 and for the year then ended incorporated in this prospectus by reference
from the Annual Report on Form 10-K of Lyondell Chemical Company for the year
ended December 31, 1998 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein
by reference, and have been so incorporated in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
The financial statements of LYONDELL-CITGO Refining LP as of December 31,
1997 and for each of the two years in the period ended December 31, 1997
incorporated in this prospectus by reference to Lyondell Chemical Company's
Annual Report on Form 10-K for the year ended December 31, 1998 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
24
<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"), which can be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549;
and at the regional offices of the Commission at 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and at Seven World Trade Center, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549 at prescribed rates. Information concerning the
operation of the public reference facilities may be obtained by calling 1-800-
SEC-0330. The Commission maintains an Internet web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission (http://www.sec.gov). The Common
Stock is listed on the New York Stock Exchange, and such material also can be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
This Prospectus, which constitutes 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 contained in the Registration Statement. Reference
is hereby made to the Registration Statement and the exhibits thereto, which
may be obtained at the public reference facilities maintained by the
Commission as described in the preceding paragraph, 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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which the Company has filed with the Commission
pursuant to the Exchange Act (File No. 1-10145), are incorporated in this
Prospectus by reference and shall be deemed to be a part hereof:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
(b) The description of the common stock, par value $1.00 per share, of
the Company contained in the Company's Registration Statement on Form 8-A
dated December 16, 1988, as such Registration Statement may be amended from
time to time for the purpose of updating, changing or modifying such
description; and
(c) The description of the Rights to Purchase Common Stock contained in
the Company's Registration Statement on Form 8-A dated December 12, 1995,
as such Registration Statement may be amended from time to time for the
purpose of updating, changing or modifying such description.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 and 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 a part
hereof from the date of filing of such document. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein
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.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus is
delivered, upon the written or oral request of such person, a copy of any or
all documents that have been incorporated herein by reference (not including
exhibits to the documents that have been incorporated herein by reference
unless such exhibits are specifically incorporated by reference in the
documents this Prospectus incorporates). Requests should be directed to
Corporate Secretary, Lyondell Chemical Company, 1221 McKinney, Houston, Texas
77010 (telephone: (713) 652-7200).
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement +
+becomes effective. This Prospectus shall not constitute an offer to sell or +
+the solicitation of an offer to buy nor shall there be any sale of these +
+securities in any State in which such offer, solicitation or sale would be +
+unlawful prior to registration or qualification under the securities laws of +
+any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED APRIL 5, 1999
PROSPECTUS $4,000,000,000
[LOGO OF LYONDELL APPEARS HERE]
Lyondell Chemical Company
Subordinated Debt Securities
Lyondell Trust I
Lyondell Trust II
Lyondell Trust III
Preferred Trust Securities fully and unconditionally guaranteed, as set forth
herein, by
Lyondell Chemical Company
Lyondell Chemical Company (the "Company" or "Lyondell") may from time to time
offer, together or separately, unsecured subordinated debt securities (the
"Subordinated Debt Trust Securities") consisting of debentures, notes or other
evidences of indebtedness in one or more series and in amounts, at prices and
on terms to be determined at or prior to the time of any such offering. The
Subordinated Debt Trust Securities when issued will be unsecured obligations of
the Company. The Company's obligations under the Subordinated Debt Trust
Securities will be subordinate and junior in right of payment with all Senior
Debt (as defined in the Prospectus Supplement) of the Company.
See "Risk Factors" beginning on page 2 for a discussion of certain factors
that should be considered by prospective investors.
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.
Lyondell Trust I, Lyondell Trust II and Lyondell Trust III (collectively, the
"Lyondell Trusts"), each a statutory business trust created under the laws of
the State of Delaware, may offer and sell, from time to time, preferred trust
securities representing undivided beneficial interests in the assets of the
respective Lyondell Trust (the "Preferred Securities" and, together with the
Subordinated Debt Trust Securities, the "Securities"). The Preferred Securities
may be offered in amounts, at prices and on terms to be determined at or prior
to the time of any such offering. The payment of periodic cash distributions
("distributions") with respect to Preferred Securities of each of the Lyondell
Trusts out of moneys held by the Property Trustee (as defined herein) of each
of the Lyondell Trusts, and payments on liquidation of each Lyondell Trust and
on redemption of Preferred Securities of such Lyondell Trust, will be
guaranteed by the Company fully and unconditionally as described herein (each
such guarantee, a "Preferred Securities Guarantee"). See "Description of the
Preferred Securities Guarantees." The Company's obligation under each Preferred
Securities Guarantee is an unsecured obligation of the Company. The ranking of
the Company's obligation under a Preferred Securities Guarantee will be set
forth in the Prospectus Supplement. Subordinated Debt Trust Securities may be
issued and sold from time to time in one or more series by the Company to a
Lyondell Trust in connection with the investment of the proceeds from the
offering of Preferred Securities and Common Securities (as defined herein) of
such Lyondell Trust. The Subordinated Debt Trust Securities purchased by a
Lyondell Trust may be subsequently distributed pro rata to holders of Preferred
Securities and Common Securities in connection with the dissolution of such
Lyondell Trust, at the election of Lyondell or upon the occurrence of certain
events as may be described in the Prospectus Supplement.
Specific terms of the Subordinated Debt Trust Securities and the Preferred
Securities in respect of which this Prospectus is being delivered (the "Offered
Securities") will be set forth in a Prospectus Supplement with respect to such
Offered Securities, which will describe, without limitation and where
applicable, the following: (i) in the case of Subordinated Debt Trust
Securities, the specific designation, aggregate principal amount, authorized
denomination, maturity, premium, if any, exchangeability, redemption,
conversion, prepayment or sinking fund provisions, if any, interest rate (which
may be fixed or variable), if any, method, if any, of calculating interest
payments, and dates for payment thereof, dates on which premium, if any, will
be payable, the right of the Company, if any, to defer payment of interest on
the Subordinated Debt Trust Securities and the maximum length of such deferral
period, the public offering price, any listing on a securities exchange, the
definition of Senior Debt and other specific terms of the offering; and (ii) in
the case of Preferred Securities, the specific designation, number of
securities, liquidation amount per security, initial public offering price, and
any listing on a securities exchange, distribution rate (or method of
calculation thereof), dates on which distributions shall be payable and dates
from which distributions shall accumulate, voting rights (if any), terms for
any conversion or exchange into other securities, any redemption or sinking
fund provisions, any other rights, preferences, privileges, limitations or
restrictions relating to the Preferred Securities and the terms upon which the
proceeds of the sale of the Preferred Securities shall be used to purchase a
specific series of Subordinated Debt Trust Securities. Unless otherwise
indicated in the Prospectus Supplement, the Company does not intend to list any
of the Offered Securities on a national securities exchange.
By separate prospectus, the form of which is included in the Registration
Statement of which this Prospectus is a part, the Company may offer from time
to time debt securities, common stock or preferred stock. The aggregate initial
public offering price of the securities to be offered pursuant to this
Prospectus and such other prospectus shall not exceed $4,000,000,000.
The Offered Securities may be offered directly, through agents designated
from time to time, through dealers or through underwriters. Such agents or
underwriters may act alone or with other agents or underwriters. See "Plan of
Distribution." Any such agents, dealers or underwriters will be set forth in
the Prospectus Supplement. If an agent of the Company and/or any Lyondell
Trust, or a dealer or underwriter is involved in the offering of the Offered
Securities, the agent's commission, dealer's purchase price, underwriter's
discount and net proceeds to the Company and/or the applicable Lyondell Trust,
as the case may be, will be set forth in, or may be calculated from, the
Prospectus Supplement. Any underwriters, dealers or agents participating in the
offering may be deemed "underwriters" within the meaning of the Securities Act
of 1933.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
The date of this Prospectus is
<PAGE>
THE COMPANY
Lyondell Chemical Company ("Lyondell" or the "Company") is a vertically
integrated, global chemical company with leading market positions in all of
its major products and low cost operations. The Company's principal executive
offices are located at 1221 McKinney Street, Houston, Texas 77010 (telephone
(713) 652-7200).
FORWARD-LOOKING STATEMENTS
Certain of the statements contained or incorporated by reference in this
Prospectus and the accompanying Prospectus Supplement, are "forward-looking
statements" within the meaning of the federal securities laws. Although
Lyondell believes the expectations reflected in such forward-looking
statements are reasonable, they do involve certain inherent assumptions, risks
and uncertainties, and Lyondell can give no assurance that such expectations
will prove to have been correct. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of the risk factors set forth below and other factors set forth in or
incorporated by reference in this Prospectus and the accompanying Prospectus
Supplement. These factors include the cyclical and highly competitive nature
of the chemical and refining industries, uncertainties associated with the
United States and worldwide economies, current and potential governmental
regulatory actions in the United States and in other countries, substantial
chemical capacity additions resulting in oversupply and declining prices and
margins, raw material costs or supply arrangements, the Company's ability to
implement cost reductions, and operating interruptions (including leaks,
explosions, fires, mechanical failure, labor difficulties, unscheduled
downtime, transportation interruptions, spills and releases, and other
environmental risks). Many of such factors are beyond Lyondell's or its joint
ventures' ability to control or predict. Management cautions against putting
undue reliance on forward-looking statements or projecting any future results
based on such statements or present or prior earnings levels.
All subsequent written and oral forward-looking statements attributable to
the Company and persons acting on its behalf are qualified in their entirety
by the cautionary statements contained in this section and elsewhere in this
Prospectus.
RISK FACTORS
The following risk factors should be considered carefully with the
information provided elsewhere in this Prospectus and the accompanying
Prospectus Supplement and the documents incorporated by reference herein in
reaching a decision regarding an investment in the Securities offered hereby.
High Leverage and Related Matters
As of December 31, 1998, the Company had outstanding consolidated debt of
approximately $7.0 billion. In addition, the Company remains liable on $713
million of debt for which primary responsibility was assumed by Equistar
Chemicals, LP ("Equistar") in connection with the formation of Equistar. The
Company's consolidated ratio of earnings to fixed charges would have been 1.1
to 1 for 1998 on a pro forma basis if the acquisition of LCW and the related
debt incurrence had occurred on January 1, 1998.
The current amount of debt of the Company significantly exceeds the
Company's historical leverage and significantly increases its debt service
obligations. The Company's historical results and financial condition do not,
accordingly, reflect the potential constraints the increase in leverage may
impose on the Company. The Company's significant increase in leverage could
have adverse effects on the Company, including: (i) the
2
<PAGE>
leverage may make the Company more vulnerable to industry cyclicality and may
limit its ability to withstand competitive pressures and adverse changes in
environmental and other government regulation, (ii) a substantial portion of
cash flow from operations (as well as cash generated from asset sales, if any,
and financings) must be dedicated to the payment of principal of and interest
on debt and will not be available for other uses such as capital expenditures
or acquisitions, (iii) additional financing is not available to the Company
upon terms as favorable as those previously available to the Company, which
may limit the Company's business growth, including its ability to effect
potential acquisitions and (iv) the Company may not be able to maintain its
current dividend rate.
The Company's credit facilities and other indebtedness contain numerous
financial and other covenants that affect and restrict the Company's business.
The ability of the Company to meet its debt service obligations and capital
expenditure needs, maintain its dividend rate and comply with the covenants
and financial requirements in the credit facilities and other indebtedness
will largely depend on the future performance of the Company and availability
of additional financing to repay and refinance bank debt, both of which will
be subject to prevailing economic, market and competitive conditions and to
other factors beyond the Company's control. The breach of any of the covenants
or financial requirements in the credit facilities or other indebtedness could
result in a default thereunder, which would permit the lenders to declare the
loans immediately payable and to terminate future lending commitments.
As of December 31, 1998, Equistar, LYONDELL-CITGO Refining, LP ("LCR") and
Lyondell Methanol Company, L.P. ("Lyondell Methanol") (the "Joint Ventures")
had, in the aggregate, outstanding debt of approximately $2.9 billion and
owners' equity of $4.6 billion. The ability of the Joint Ventures to
distribute cash to the Company is limited by their respective debt service
obligations. In addition, a default under certain Joint Venture debt
agreements would constitute a cross-default under the Company's credit
facilities. Certain debt instruments that were assumed by Equistar, but as to
which Lyondell remains an obligor as well, contain provisions that generally
provide that holders of such debt may, under certain limited circumstances,
require an obligor to repurchase the debt ("Put Rights"). The Put Rights would
be triggered by a specified decline in public ratings on such debt following
(i) certain events affecting control of Lyondell or Equistar or (ii) the
making by Lyondell or Equistar of certain dividends, distributions or
repurchases in excess of specified amounts. The debt subject to the Put Rights
consists of $150 million aggregate principal amount of notes maturing in June
1999, bearing interest at 10 percent, and $163 million aggregate principal
amount of medium-term notes maturing at various dates through 2005, with a
weighted average interest rate at December 31, 1998 of 9.87 percent. To date,
these Put Rights have not been triggered.
Industry Cyclicality and Overcapacity
The Company's historical operating results reflect the cyclical and volatile
nature of both the chemical and refining industries. The Company experienced
earnings declines in the fourth quarter of 1998 compared to the third quarter
of 1998 primarily because of lower prices in both the chemicals and refining
industries. Both industries are mature and capital intensive, and industry
margins are sensitive to supply and demand balances, which have historically
been cyclical. The chemical industry historically has experienced alternating
periods of tight supply, causing prices and profit margins to increase,
followed by periods of substantial capacity additions, resulting in oversupply
and declining prices and profit margins. Due to the commodity nature of most
of the Company's products, the Company is not necessarily able to protect its
market position by product differentiation or to pass on cost increases to its
customers. Accordingly, increases in raw material and other costs do not
necessarily correlate with changes in product prices, either in the direction
of the price change or in absolute magnitude. Moreover, a number of
participants in various segments of the chemical industry have announced plans
for expansion of plant capacity. There can be no assurance that future growth
in product demand will be sufficient to utilize this additional, or even
current, capacity. Excess industry capacity, to the extent it occurs,
depresses the Company's volumes and margins. As a result, the Company's
earnings are subject to significant fluctuation.
External factors beyond the Company's control, such as general economic
conditions, competitor action, international events and circumstances and
governmental regulation in the United States and abroad, can cause volatility
in feedstock prices, as well as fluctuations in demand for the Company's
products, product prices,
3
<PAGE>
volumes and margins, and can magnify the impact of economic cycles on the
Company's business. A number of the Company's products are highly dependent on
durable goods markets, such as housing and automotive, that are particularly
cyclical.
Intense Competition
The chemical industry is highly competitive. Many of the Company's
competitors are larger and have greater financial resources than the Company.
Among Lyondell's chemical competitors are some of the world's largest chemical
companies, including The Dow Chemical Company, Shell Chemical, BASF AG, Bayer
AG and Union Carbide Corporation. In the past several years, there have been a
number of mergers, acquisitions and
spin-offs in the chemical industry. This restructuring activity may result in
fewer but more competitive producers with greater financial resources than the
Company.
Competition within the chemical industry is affected by a variety of
factors, including product price, reliability of product supply, technical
support, customer service, product quality and availability to the market of
potential substitute materials. Changes in the competitive environment,
including (i) the emergence of new competitors, (ii) the rate of capacity
additions by competitors, (iii) the intensification of price competition in
the Company's markets, (iv) the introduction of new or substitute products by
competitors, (v) technological innovations by competitors and (vi) new
environmental laws and regulatory requirements, could have a material adverse
effect on the business and operations of the Company.
Potential Difficulties in Integrating Recently Acquired and Combined
Operations
The Company acquired Lyondell Chemical Worldwide, Inc. (formerly ARCO
Chemical Company) ("LCW") in July 1998. The Company combined its
petrochemicals and polymers business with that of Millennium Chemicals Inc. to
form Equistar Chemicals, LP in December 1997. Equistar was expanded by the
addition of certain businesses previously held by Occidental Petroleum
Corporation in May 1998. The process of integrating the operations of LCW with
the Company has only recently begun, and the process of integrating the
operations of Equistar is not complete.
As is the case with any integration of major businesses that previously
operated independently, the integration processes for LCW and for Equistar
will require the dedication of significant management and operational
resources. The difficulties of combining operations may be exacerbated by the
necessity of coordinating geographically separate organizations, integrating
personnel with disparate business backgrounds and combining different
transaction processing and financial reporting systems and processes and
corporate cultures. The process of integrating operations could cause an
interruption of, or loss of momentum in, the activities of the combined
enterprise's business. In addition, the Company may suffer a loss of key
employees, customers or suppliers, loss of revenues, increases in costs or
other difficulties, some of which may not have been foreseen. There can be no
assurance that the Company will be able to realize the operating efficiencies,
cost savings and other benefits that are sought from such transactions.
Difficulties encountered in the integration processes could have a material
adverse effect on the business and operations of the Company.
Acquisitions, Dispositions and Joint Ventures
Each of Lyondell and Equistar actively seeks opportunities to maximize
efficiency or value through various transactions. These transactions may
include purchases or sales of assets or contractual arrangements or joint
ventures that are intended to result in the realization of synergies, the
creation of efficiencies or the generation of cash to reduce indebtedness. To
the extent permitted under Lyondell's and Equistar's credit facilities and
other indebtedness, some of these transactions may be financed by additional
borrowings by Lyondell or Equistar or by the issuance of equity securities.
These transactions may often affect the results of operations of Lyondell or
Equistar in the short term because of the costs associated with such
transactions, but they are expected to yield longer-term benefits if the
expected efficiencies and synergies of the transactions are realized. Factors
such as those described in "--Potential Difficulties in Integrating Recently
Acquired and Combined Operations" may make it difficult or impossible to
realize such expected efficiencies and synergies.
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Shared Control of Joint Ventures
The Company conducts a substantial amount of its operations through its
Joint Ventures. The Company shares control of these Joint Ventures with
unaffiliated third parties.
The Company's forecasts and plans with respect to these Joint Ventures
assume that its joint venture partners will observe their obligations with
respect to the Joint Ventures. In the event that any of the Company's joint
venture partners do not observe their commitments, it is possible that the
affected Joint Venture would not be able to operate in accordance with its
business plans or that the Company would be required to increase its level of
commitment in order to give effect to such plans.
Joint Venture Structure
The Company conducts a substantial amount of its operations through its
Joint Ventures. The Company's ability to meet its debt service obligations is
dependent, in part, upon the receipt of distributions from its Joint Ventures.
Subject to the provisions of the applicable debt agreements, future borrowings
by the Company's Joint Ventures may contain restrictions or prohibitions on
the payment of distributions by such Joint Ventures to the Company. Under
applicable state law, the Company's Joint Ventures may be limited in amounts
that they are permitted to pay as distributions on their equity interests.
As with any such joint venture arrangements, differences in views among the
joint venture participants may result in delayed decisions or in failures to
agree on major matters, potentially adversely affecting the business and
operations of the Joint Ventures and in turn the business and operations of
the Company.
Importance of Crude Oil Supply Agreement and Related Risks
Substantially all of the crude oil used by LCR as a feedstock for its
refinery is purchased under the Crude Supply Agreement with PDVSA Petroleo y
Gas S.A. ("PDVSA Oil"), which, like CITGO Petroleum Corporation ("CITGO"), is
a subsidiary of Petroleos de Venezuela, S.A., the Venezuelan national oil
company. The Crude Supply Agreement was entered into in 1993 and the Company
experienced the full effects of the Crude Supply Agreement beginning in 1997.
The Crude Supply Agreement incorporates formula prices to be paid by LCR for
the crude oil supplied 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 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
varies depending on, among other things, the efficiency with which LCR
conducts its operations from time to time. Although LCR believes that the
Crude Supply Agreement reduces the volatility of its earnings and cash flows,
the Crude Supply Agreement also limits LCR's ability to enjoy higher margins
during periods when the market price of crude oil is low relative to the then
current market prices for refined products. In addition, if the actual yields,
costs or volumes of the LCR refinery differ substantially from those
contemplated by the Crude Supply Agreement, the benefits of this agreement to
LCR could be substantially diminished, and could result in lower earnings and
cash flow for LCR. Furthermore, there may be periods during which LCR's costs
for crude oil under the Crude Supply Agreement may be higher than might
otherwise be available to LCR from other sources.
There are risks associated with enforcing the provisions of contracts with
companies such as PDVSA Oil that are non-United States affiliates of a
sovereign nation. It is impossible to predict how governmental policies may
change under the current or any subsequent Venezuelan government. In addition,
there are risks associated
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with enforcing judgments of United States courts against entities whose assets
are located outside of the United States and whose management does not reside
in the United States. In addition, all of the crude oil supplied by PDVSA Oil
under the Crude Supply Agreement is produced in Venezuela, a country that has
experienced economic difficulties and attendant social and political unrest in
recent years. If the Crude Supply Agreement is modified or terminated or this
source of crude oil is otherwise interrupted due to production difficulties,
OPEC-mandated supply cuts, political or economic events in Venezuela or other
factors, LCR could experience significantly greater volatility in its earnings
and cash flows. The parties each have the right to transfer their interests in
LCR to unaffiliated third parties in certain circumstances, subject to
reciprocal rights of first refusal. In the event that CITGO were to transfer
its interest in LCR to an unaffiliated third party, PDVSA Oil would have an
option to terminate the Crude Supply Agreement. Depending on then current
market conditions, any breach or termination of the Crude Supply Agreement
could adversely affect LCR, since LCR would have to purchase all of its crude
oil feedstocks in the merchant market, which could subject LCR to significant
price fluctuations. There can be no assurance that alternative crude oil
supplies providing similar margins would be available for purchase by LCR.
In late April 1998, LCR received notification from PDVSA of reduced delivery
of crude oil related to announced OPEC production cuts. In August 1998, LCR
began receiving reduced allocations of crude oil from PDVSA. Following
additional cutbacks announced by OPEC in late March 1999, LCR anticipates
further reductions in its allocation of crude oil under the Crude Supply
Agreement. Historically Venezuela has complied with OPEC-mandated supply cuts
by reducing crude supply. Decreased allocations of PDVSA crude oil tend to
reduce LCR's pretax income and, accordingly, Lyondell's pro rata share of
LCR's income. OPEC-mandated supply cuts are a force majeure event under the
Crude Supply Agreement for which the Company has no contractual remedy. While
to date LCR has been able to obtain alternate supplies of crude oil, the
margin for these crude oils has been less than for the extra heavy Venezuelan
crude oil purchased under the Crude Supply Agreement. There can be no
assurance that PDVSA will not announce further cutbacks in crude oil
production thereby reducing LCR's allocation of extra heavy crude oil or that
LCR will be able to continue to obtain adequate alternative supplies of crude
oil or at what cost Lyondell will be able to obtain such substitute crude oil.
Operating Hazards
The occurrence of material operating problems, including but not limited to
the events described below, may have a material adverse effect on the
productivity and profitability of a particular manufacturing facility, or on
the Company as a whole, during and after the period of such operational
difficulties. The Company's revenues are dependent on the continued operation
of its various production facilities (including the ability to complete
construction projects on schedule). The Company's operations are subject to
the usual hazards associated with chemical manufacturing and refining and the
related storage and transportation of feedstocks, products and wastes,
including pipeline leaks and ruptures, explosions, fires, inclement weather
and natural disasters, mechanical failure, unscheduled downtime, labor
difficulties, transportation interruptions, remediation complications,
chemical spills, discharges or releases of toxic or hazardous substances or
gases, storage tank leaks and other environmental risks. These hazards can
cause personal injury and loss of life, severe damage to or destruction of
property and equipment and environmental damage, and may result in suspension
of operations and the imposition of civil or criminal penalties. Furthermore,
the Company is also subject to present and future claims with respect to
workplace exposure, workers' compensation and other matters. The Company
maintains property, business interruption and casualty insurance which it
believes is in accordance with customary industry practices, but it is not
fully insured against all potential hazards incident to its business.
Environmental Considerations
The Company's operations and ownership and use of real property are subject
to extensive environmental, health and safety laws and regulations promulgated
by domestic and foreign governments at both the national and local level. Many
of these laws and regulations impose requirements relating to the clean-up of
contamination, impose liability in the event of damage of natural resources
and provide for substantial fines and
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potential criminal sanctions for violations. The nature of the chemical and
refining industries exposes the Company to risks of liability under such laws
and regulations due to the production, refining, storage, transportation and
sale of materials that can cause contamination or personal injury if released
into the environment. In addition, individuals could seek damages for alleged
personal injury or property damage due to exposure to chemicals at the
Company's facilities or to chemicals otherwise owned or controlled by the
Company. Environmental laws may have a significant effect on the nature and
scope of cleanup of contamination at current and former operating facilities,
the costs of transportation and storage of feedstocks and finished products
and the costs of the storage and disposal of wastes. Also, "Superfund"
statutes may impose joint and several liability for the costs of remedial
investigations and actions on the entities that generated waste, arranged for
disposal of the wastes, transported to or selected the disposal sites and the
past and present owners and operators of such sites. All such responsible
parties (or any one of them, including the Company) may be required to bear
all of such costs regardless of fault, legality of the original disposal or
ownership of the disposal site.
The Company expects that the nature of its businesses will continue to
subject the Company to increasingly stringent environmental and health and
safety laws and regulations. It is difficult to predict the future
interpretation and development of such laws and regulations or their impact on
future earnings and operations, but the Company anticipates that these
standards will continue to require increased capital expenditures and
operating costs. In particular, the ultimate effect of the Clean Air Act on
the Company's operations will depend on how the law is interpreted and
implemented pursuant to regulations that are currently being developed and on
additional factors such as the evolution of environmental control
technologies.
The Company's policy is to accrue costs relating to environmental matters
when it is probable that such costs will be required and the related costs can
be reasonably estimated. Estimated costs for future environmental compliance
and remediation or other costs are necessarily imprecise due to such factors
as the continuing evolution of environmental laws and regulatory requirements,
the availability and application of technology, the identification of
presently unknown remediation sites and the allocation of costs among the
responsible parties under applicable statutes. On a quarterly basis, the
Company evaluates the status of all significant existing or potential
environmental issues, develops or revises estimates of costs to satisfy known
remediation requirements (including those relating to "Superfund"
requirements) and adjusts its accruals accordingly; as of December 31, 1998,
the reserve was $48 million. Based upon information presently available, the
Company does not expect that such future costs will have a material adverse
effect on its competitive or financial position or its ongoing results of
operations. However, it is not possible to predict accurately the amount or
timing of costs of any future environmental remediation requirements. Such
costs could be material to future quarterly or annual results of operations.
MTBE
Pending or future legislative initiatives or litigation may materially
adversely affect the Company's MTBE sales or subject the Company to product
liability. The presence of MTBE in some water supplies in California and other
states due to gasoline leaking from underground storage tanks and in surface
water from recreational water craft has led to public concern that MTBE may
contaminate drinking water supplies, and thereby result in a possible health
risk. The Governor of California has announced an intention to eliminate MTBE
from gasoline sold in California by December 31, 2002. There have been claims
that MTBE travels more rapidly through soil, and is more soluble in water,
than most other gasoline components, and is more difficult and more costly to
remediate. Heightened public awareness about MTBE has resulted in certain
state and federal legislative initiatives that have sought either to rescind
the oxygenate requirement for reformulated gasoline sold in California and
other states or restrict the use of MTBE. There is ongoing review of this
issue and the ultimate resolution of the appropriateness of using MTBE could
result in a significant reduction in the Company's MTBE sales.
In addition, the Company has a take-or-pay MTBE sales contract with Atlantic
Richfield Company ("ARCO"), which contributes significant pre-tax margin. If
such legislative initiatives were enacted, ARCO has
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indicated that it might attempt to invoke a force majeure provision in the
ARCO contract in order to reduce the quantities of MTBE it purchases under, or
to terminate, the contract. The Company would vigorously dispute such action.
The contract has an initial term expiring December 31, 2002 and provides for
formula-based prices that are currently significantly above spot market prices
for MTBE. A significant reduction in the Company's sales under the ARCO
contract could have a negative impact on the Company's results of operations.
Foreign Operations, Country Risks and Exchange Rate Fluctuations
International operations and exports to foreign markets are subject to a
number of risks, including currency exchange rate fluctuations, trade
barriers, exchange controls, national and regional labor strikes, political
risks and risks of increases in duties and taxes, as well as changes in laws
and policies governing operations of foreign-based companies. Although the
Company uses various types of foreign currency forward, option and swap
contracts to reduce foreign exchange exposures with respect to revenues,
capital commitments and other expenses denominated in foreign currencies,
there can be no assurance that such hedging techniques will protect the
Company's reported results against such risks or that the Company will not
incur material losses on such contracts. In addition, earnings of foreign
subsidiaries and intercompany payments may be subject to foreign income tax
rules that may reduce cash flow available to meet required debt service and
other obligations of the Company.
A number of Asian and Latin American economies have experienced economic
difficulties in recent periods. Prolonged economic difficulties in the Asian
and Latin American markets could significantly impact worldwide demand and
thereby place downward pressure on margins, which, if material, could in turn
have an adverse effect on the business and operations of the Company.
Significant Fluctuations in Quarterly Results
The Company's quarterly results will vary significantly depending on various
factors, most of which are beyond the Company's control, including changes in
product prices, product demand, raw material costs or supply arrangements;
regional business activities, including a lower level of economic activity in
Europe during the summer; adverse developments in foreign markets;
fluctuations in shipments to customers; foreign exchange fluctuations;
unanticipated expenses; changes in interest rates; and the scheduling of plant
turnarounds.
Change of Control Related Provisions
Under the Company's credit facilities, a change in control of the Company is
an event of default, which would permit the lenders to declare the loans
thereunder immediately payable and to terminate future lending commitments.
Under the credit facilities, with certain exceptions, a change in control is
deemed to occur if any person or group acquires 20% or more of the Company's
common stock or there has generally been a change in a majority of the
Company's Board of Directors. The Company has adopted a stockholders' rights
plan. In addition, the Delaware General Corporation Law contains provisions
that impose restrictions on business combinations with interested parties and
the Company's By-Laws contain certain advance notice provisions. The
provisions of the credit facilities, the Delaware General Corporation Law, the
Company's stockholders' rights plan and the Company's By-Laws (as well as the
Put Rights described under "--High Leverage and Related Matters" above) may
have the effect of delaying, deferring or preventing a change in control of
the Company, which could prevent the Company's stockholders from receiving a
takeover premium for their shares of the Company's common stock.
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USE OF PROCEEDS
Except as otherwise described in any Prospectus Supplement, the net proceeds
from the sale of the Offered Securities will be used for general corporate
purposes, which may include, but are not limited to, repayment or refinancing
of indebtedness, working capital, capital expenditures, acquisitions and
repurchases or redemptions of debt or equity securities of Lyondell, and may
initially be invested in short-term securities.
Each Lyondell Trust will use all proceeds received from the sale of its
Trust Securities (as defined herein) to purchase Subordinated Debt Trust
Securities from the Company.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the periods indicated:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(a)................. 1.2x 4.6x 2.2x 6.8x 4.8x
Supplemental pro forma ratio of earnings to fixed
charges(b)........................................... 1.1x
</TABLE>
- --------
(a) The ratio of earnings to fixed charges has been calculated including
amounts for Lyondell and its proportionate share of amounts for Equistar
(57 percent through May 15, 1998 and 41 percent thereafter), LCR (58.75
percent for the year ended December 31, 1998, 86 percent for the first
quarter of 1997 and 58.49 percent for the remainder of 1997) and Lyondell
Methanol (75 percent for the year ended December 31 1998), for the periods
in which Lyondell accounted for its respective investment in each such
Joint Venture using the equity method of accounting. Lyondell remains
liable on approximately $713 million of debt for which primary
responsibility was assumed by Equistar in connection with its formation.
Fixed charges include interest expense plus capitalized interest and the
portion of rental expense that represents an interest factor.
(b) The supplemental pro forma ratio of earnings to fixed charges gives effect
to the acquisition of LCW and the debt issued by the Company pursuant to
the related credit facilities as if such transactions had occurred as of
January 1, 1998.
THE LYONDELL TRUSTS
Each of Lyondell Trust I, Lyondell Trust II and Lyondell Trust III is a
statutory business trust created on July 29, 1998, November 9, 1998 and
November 9, 1998, respectively, under the Delaware Business Trust Act (the
"Business Trust Act") pursuant to a separate declaration of trust among the
Trustees (as defined herein) of such Lyondell Trust and the Company and the
filing of a certificate of trust with the Secretary of State of the State of
Delaware. Such declaration will be amended and restated in its entirety (as so
amended and restated, the "Declaration") substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus forms a part,
as of the date the Preferred Securities of such Lyondell Trust are initially
issued. Each Declaration will be qualified under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act").
This description summarizes the material terms of the Declarations and is
qualified in its entirety by reference to the form of Declaration, which has
been filed as an exhibit to the Registration Statement of which this
Prospectus is a part, and the Trust Indenture Act.
The principal office of each Lyondell Trust is c/o Lyondell Chemical
Company, 1221 McKinney Street, Suite 1600, Houston, Texas 77010. The telephone
number of each Lyondell Trust is (713) 652-7200.
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Preferred Securities
Upon issuance of any Preferred Securities by a Lyondell Trust, the holders
thereof will own all of the issued and outstanding Preferred Securities of
such Lyondell Trust. The Company will, directly or indirectly, acquire common
securities representing common undivided beneficial interests in the assets of
each Lyondell Trust (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") in an amount equal to 3% of the total
capital of such Lyondell Trust and will own, directly or indirectly, all of
the issued and outstanding Common Securities of each Lyondell Trust. The
Preferred Securities and the Common Securities will rank pari passu with each
other and will have equivalent terms; provided that (i) if a Declaration Event
of Default (as defined under "--Events of Default") under the Declaration of a
Lyondell Trust occurs and is continuing, the holders of Preferred Securities
of such Lyondell Trust will have a priority over holders of the Common
Securities of such Lyondell Trust with respect to payments in respect of
distributions and payments upon liquidation, redemption and maturity and (ii)
holders of Common Securities have the exclusive right (subject to the terms of
the applicable Declaration) to appoint, remove or replace the Trustees and to
increase or decrease the number of Trustees. Each Lyondell Trust exists for
the purposes of (a) issuing its Preferred Securities, (b) issuing its Common
Securities to the Company, (c) investing the gross proceeds from the sale of
its Trust Securities in Subordinated Debt Trust Securities of the Company and
(d) engaging in only such other activities as are necessary, convenient or
incidental thereto or are specifically authorized in its Declaration. The
rights of the holders of the Preferred Securities of a Lyondell Trust,
including economic rights, rights to information and voting rights, are set
forth in the applicable Declaration, the Business Trust Act and the Trust
Indenture Act.
Powers and Duties of Trustees
The number of trustees (the "Trustees") of each Lyondell Trust will
initially be five. Three of such Trustees (the "Regular Trustees") are
individuals who are employees or officers of the Company. The fourth such
Trustee will be The First National Bank of Chicago, which is unaffiliated with
the Company and which will serve as the property trustee (the "Property
Trustee") and act as the indenture trustee under the Declaration for purposes
of the Trust Indenture Act. The fifth such Trustee is First Chicago Delaware
Inc. which has its principal place of business in the State of Delaware (the
"Delaware Trustee"). Pursuant to each Declaration, legal title to the
Subordinated Debt Trust Securities purchased by a Lyondell Trust will be owned
by and held of record in the name of the Property Trustee in trust for the
benefit of the holders of the Trust Securities of such Lyondell Trust, and the
Property Trustee will have the power to exercise all rights, powers and
privileges under the Indenture (as defined under "Description of the
Subordinated Debt Trust Securities") with respect to such Subordinated Debt
Trust Securities. In addition, the Property Trustee will maintain exclusive
control of a segregated non-interest bearing bank account (the "Property
Account") to hold all payments in respect of the Subordinated Debt Trust
Securities purchased by a Lyondell Trust for the benefit of the holders of its
Trust Securities. The Property Trustee will promptly make distributions to the
holders of the Trust Securities out of funds from the Property Account. The
Preferred Securities Guarantees are separately qualified under the Trust
Indenture Act and will be held by The First National Bank of Chicago (the
"Guarantee Trustee"), acting in its capacity as indenture trustee with respect
thereto, for the benefit of the holders of the applicable Preferred
Securities. As used in this Prospectus and any accompanying Prospectus
Supplement, the term "Property Trustee" with respect to a Lyondell Trust
refers to The First National Bank of Chicago acting either in its capacity as
a Trustee under the related Declaration and the holder of legal title to the
Subordinated Debt Trust Securities purchased by such Lyondell Trust or in its
capacity as the Guarantee Trustee under the applicable Preferred Securities
Guarantee, as the context may require. The Company, as the direct or indirect
owner of all of the Common Securities of each Lyondell Trust, will have the
exclusive right to appoint, remove or replace Trustees and to increase or
decrease the number of Trustees, provided that the number of Trustees shall
be, except under certain circumstances, at least five and the majority of
Trustees shall be Regular Trustees. The term of a Lyondell Trust will be set
forth in the Prospectus Supplement but may dissolve earlier as provided in the
applicable Declaration.
The duties and obligations of the Trustees of a Lyondell Trust will be
governed by the Declaration of such Lyondell Trust, the Business Trust Act and
the Trust Indenture Act. Under its Declaration, each Lyondell Trust will not,
and the Trustees will cause such Lyondell Trust not to, engage in any activity
other than in connection
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with the purposes of such Lyondell Trust or other than as required or
authorized by the related Declaration. In particular, each Lyondell Trust
shall not and the Trustees shall cause each Lyondell Trust not to (a) invest
any proceeds received by such Lyondell Trust from holding the Subordinated
Debt Trust Securities purchased by such Lyondell Trust but shall promptly
distribute from the Property Account all such proceeds to holders of its Trust
Securities pursuant to the terms of the related Declaration and of its Trust
Securities; (b) acquire any assets other than as expressly provided in the
related Declaration; (c) possess property of such Lyondell Trust for other
than a trust purpose; (d) make any loans, other than loans represented by the
Subordinated Debt Trust Securities; (e) possess any power or otherwise act in
such a way as to vary the assets of such Lyondell Trust or the terms of its
Trust Securities in any way whatsoever, except as expressly provided in the
related Declaration; (f) issue any securities or other evidences of beneficial
ownership of, or beneficial interests in, such Lyondell Trust other than its
Trust Securities; (g) incur any indebtedness for borrowed money; (h) direct
the time, method and place of conducting any proceeding for any remedy
available to the Indenture Trustee (as defined under "Description of the
Subordinated Debt Trust Securities") or exercising any trust or power
conferred upon the Indenture Trustee with respect to the Subordinated Debt
Trust Securities deposited in such Lyondell Trust as trust assets; (i) waive
any past default that is waivable under the Indenture; (j) exercise any right
to rescind or annul a declaration of acceleration of the maturity of the
principal of all of the Subordinated Debt Trust Securities deposited in such
Lyondell Trust as trust assets, without, in the case of clauses (h), (i) and
(j), obtaining the prior approval of the holders of a majority in liquidation
amount of all outstanding Trust Securities of such Lyondell Trust; (k) consent
to any amendment, modification or termination of the Indenture or the
Subordinated Debt Trust Securities deposited in such Lyondell Trust as trust
assets, unless in the case of this clause (k) the Property Trustee shall have
received an opinion of counsel experienced in such matters to the effect that
such amendment, modification or termination will not cause more than an
insubstantial risk that for United States federal income tax purposes such
Lyondell Trust will not be classified as a grantor trust; (l) take or consent
to any action that would result in the placement of a lien, pledge, charge,
mortgage or other encumbrance on any of the property of such Lyondell Trust;
(m) vary the investment (within the meaning of Treasury Regulation Section
301.7701-4(c)) of such Lyondell Trust or of the holders of its Trust
Securities; (n) after the issuance of its Preferred Securities, enter into any
contract or agreement (other than any depositary agreement or any agreement
with any securities exchange or automated quotation system) that does not
expressly provide that the holders of such Preferred Securities, in their
capacities as such, have limited liability (in accordance with the provisions
of the Business Trust Act) for the liabilities and obligations of such
Lyondell Trust or (o) revoke any action previously authorized or approved by a
vote of the holders of its Preferred Securities except by subsequent vote of
such holders.
Books and Records
The books and records of each Lyondell Trust will be maintained at the
principal office of such Lyondell Trust and will be open for inspection by a
holder of Preferred Securities of such Lyondell Trust or his authorized
representative for any purpose reasonably related to his interest in such
Lyondell Trust during normal business hours.
Voting
Holders of Preferred Securities generally will have limited voting rights,
relating only to the modification of the Preferred Securities and, under
certain circumstances, to the exercise of a Lyondell Trust's rights as holder
of the Subordinated Debt Trust Securities and the Preferred Securities
Guarantee. The holders of the Preferred Securities will not be able to
appoint, remove or replace, or to increase or decrease the number of Trustees,
which rights are vested exclusively in the Common Securities.
The Property Trustee
The Property Trustee, for the benefit of the holders of the Trust Securities
of a Lyondell Trust, is authorized under each Declaration to exercise all
rights under the Indenture with respect to the Subordinated Debt Trust
Securities deposited in such Lyondell Trust as trust assets, including its
rights as the holder of such Subordinated Debt Trust Securities to enforce the
Company's obligations under such Subordinated Debt Trust Securities upon
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<PAGE>
the occurrence of an Indenture Event of Default (as defined herein under
"Description of the Subordinated Debt Trust Securities--Indenture Events of
Default"). The Property Trustee shall also be authorized to enforce the rights
of holders of the Preferred Securities of a Lyondell Trust under the related
Preferred Securities Guarantee. If any Lyondell Trust's failure to make
distributions on the Preferred Securities of such Lyondell Trust is a
consequence of the Company's exercise of any right under the terms of the
Subordinated Debt Trust Securities deposited in such Lyondell Trust as trust
assets to extend the interest payment period for such Subordinated Debt
Trust Securities, the Property Trustee will have no right to enforce the
payment of distributions on such Preferred Securities until a Declaration
Event of Default shall have occurred. If a Declaration Event of Default has
occurred and is continuing, then the holders of at least a majority in
liquidation amount of the Preferred Securities of a Lyondell Trust will have
the right to direct the Property Trustee for such Lyondell Trust with respect
to certain matters under the related Declaration and the related Preferred
Securities Guarantee. If the Property Trustee fails to enforce its rights
under the applicable series of Subordinated Debt Trust Securities, any holder
of Preferred Securities, to the extent permitted by applicable law, may, after
a period of 30 days has elapsed from such Holder's written request to the
Property Trustee to enforce such rights, institute a legal proceeding directly
against the Company to enforce such rights. Notwithstanding the foregoing, if
an Event of Default under the applicable Declaration has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal, or premium, if any, on the applicable series of
Subordinated Debt Trust Securities on the date such interest, principal or
premium is otherwise payable (or in the case of redemption, on the redemption
date), then a holder of Preferred Securities of such Lyondell Trust may
directly institute a proceeding for enforcement of payment to such holder of
the principal of, or premium, if any, or interest on the applicable series of
Subordinated Debt Trust Securities having a principal amount equal to the
aggregate liquidation amount of the Preferred Securities of such holder (a
"Holder Direct Action") on or after the respective due date specified in the
applicable series of Subordinated Debt Trust Securities. In connection with
such Holder Direct Action, the Company will be subrogated to the rights of
such holder of Preferred Securities under the applicable Declaration to the
extent of any payment made by the Company to such holder of Preferred
Securities in such Holder Direct Action. Except as expressly provided in the
preceding sentences or in the applicable Prospectus Supplement, the holders of
Preferred Securities of such Lyondell Trust will not be able to exercise
directly any other remedy available to the holders of the applicable series of
Subordinated Debt Trust Securities.
Distributions
Pursuant to each Declaration, distributions on the Preferred Securities of a
Lyondell Trust must be paid on the dates payable to the extent that the
Property Trustee for such Lyondell Trust has cash on hand in the applicable
Property Account to permit such payment. The funds available for distribution
to the holders of the Preferred Securities of a Lyondell Trust will be limited
to payments received by the Property Trustee in respect of the Subordinated
Debt Trust Securities that are deposited in such Lyondell Trust as trust
assets. If the Company does not make interest payments on the Subordinated
Debt Trust Securities deposited in a Lyondell Trust as trust assets, the
Property Trustee will not make distributions on the Preferred Securities of
such Lyondell Trust. Under each Declaration, if and to the extent the Company
does make interest payments on the Subordinated Debt Trust Securities
deposited in a Lyondell Trust as trust assets, the Property Trustee is
obligated to make distributions on the Trust Securities of such Lyondell Trust
on a Pro Rata Basis (as defined below). The payment of distributions on the
Preferred Securities of a Lyondell Trust is guaranteed by the Company as and
to the extent set forth under "Description of the Preferred Securities
Guarantees." A Preferred Securities Guarantee is a guarantee from the time of
issuance of the Preferred Securities, but the Preferred Securities Guarantee
covers distributions and other payments on the applicable Preferred Securities
only if and to the extent that the Company has made a payment to the Property
Trustee of interest or principal, or premium, if any, on the Subordinated Debt
Trust Securities deposited in a Lyondell Trust as trust assets. As used in
this Prospectus, the term "Pro Rata Basis" shall mean pro rata to each holder
of Trust Securities of a Lyondell Trust according to the aggregate liquidation
amount of the Trust Securities of such Lyondell Trust held by the relevant
holder in relation to the aggregate liquidation amount of all Trust Securities
of such Lyondell Trust outstanding unless, in relation to a payment, a
Declaration Event of Default under the related Declaration has occurred and is
continuing, in which case any funds available to make such payment shall be
paid first to each holder of the Preferred Securities of
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such Lyondell Trust pro rata according to the aggregate liquidation amount of
the Preferred Securities held by the relevant holder in relation to the
aggregate liquidation amount of all the Preferred Securities of such Lyondell
Trust outstanding, and only after satisfaction of all amounts owed to the
holders of such Preferred Securities, to each holder of Common Securities of
such Lyondell Trust pro rata according to the aggregate liquidation amount of
such Common Securities held by the relevant holder in relation to the
aggregate liquidation amount of all Common Securities of such Lyondell Trust
outstanding.
Events of Default
If an Indenture Event of Default occurs and is continuing with respect to
the Subordinated Debt Trust Securities deposited in a Lyondell Trust as trust
assets, an Event of Default under the Declaration (a "Declaration Event of
Default") of such Lyondell Trust will occur and be continuing, with respect to
any outstanding Trust Securities of such Lyondell Trust. In such event, each
Declaration provides that the holders of Common Securities of such Lyondell
Trust will be deemed to have waived any such Declaration Event of Default with
respect to the Common Securities until all Declaration Events of Default with
respect to the Preferred Securities of such Lyondell Trust have been cured or
waived or otherwise eliminated. Until all such Declaration Events of Default
with respect to the Preferred Securities of such Lyondell Trust have been so
cured, waived or otherwise eliminated, the Property Trustee will be deemed to
be acting solely on behalf of the holders of the Preferred Securities of such
Lyondell Trust and only the holders of such Preferred Securities will have the
right to direct the Property Trustee with respect to certain matters under
such Declaration and consequently under the Indenture. In the event that any
Declaration Event of Default with respect to the Preferred Securities of such
Lyondell Trust is waived by the holders of the Preferred Securities of such
Lyondell Trust as provided in the Declaration, the holders of Common
Securities of such Lyondell Trust pursuant to such Declaration have agreed
that such waiver also constitutes a waiver of such Declaration Event of
Default with respect to such Common Securities for all purposes under the
Declaration without any further act, vote or consent of the holders of such
Common Securities. The Property Trustee shall notify each holder of Preferred
Securities of a Lyondell Trust of any notice of default with respect to the
related Subordinated Debt Trust Securities, unless such default has been cured
before the giving of such notice or the board of directors, the executive
committee or a trust committee of directors and/or Responsible Officers (as
that term is defined in the applicable Declaration) of the Property Trustee in
good faith determines that the withholding of such notice is in the interests
of the holders of the Trust Securities of such Lyondell Trust.
Record Holders
Each Declaration provides that the Trustees of such Lyondell Trust may treat
the person in whose name a certificate representing its Preferred Securities
is registered on the books and records of such Lyondell Trust as the sole
holder thereof and of the Preferred Securities represented thereby for
purposes of receiving distributions and for all other purposes and,
accordingly, shall not be bound to recognize any equitable or other claim to
or interest in such certificate or in the Preferred Securities represented
thereby on the part of any person, whether or not the Trustees of such
Lyondell Trust shall have actual or other notice thereof. Preferred Securities
will be issued in fully registered form. Unless otherwise specified in a
Prospectus Supplement, Preferred Securities will be represented by one or more
global certificates registered on the books and records of such Lyondell Trust
in the name of a depositary (the "Depositary") named in an accompanying
Prospectus Supplement or its nominee. Under each Declaration:
(i) such Lyondell Trust and the Trustees thereof shall be entitled to
deal with the Depositary (or any successor depositary) for all purposes,
including the payment of distributions and receiving approvals, votes or
consents under the related Declaration, and except as set forth in the
related Declaration with respect to the issuance of definitive certificates
representing the Preferred Securities, shall have no obligation to persons
owning a beneficial interest in Preferred Securities ("Preferred Security
Beneficial Owners") registered in the name of and held by the Depositary or
its nominee; and
(ii) the rights of Preferred Security Beneficial Owners shall be
exercised only through the Depositary (or any successor depositary) and
shall be limited to those established by law and agreements between such
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Preferred Security Beneficial Owners and the Depositary and/or its
participants. With respect to Preferred Securities registered in the name
of and held by the Depositary or its nominee, all notices and other
communications required under each Declaration shall be given to, and all
distributions on such Preferred Securities shall be given or made to, the
Depositary (or its successor).
The specific terms of the depositary arrangement with respect to the
Preferred Securities of a Lyondell Trust will be disclosed in the applicable
Prospectus Supplement.
Debts and Obligations
In each Declaration, the Company has agreed to pay all debts and obligations
(other than with respect to the related Trust Securities) and all costs and
expenses of the applicable Lyondell Trust, including the fees and expenses of
its Trustees and any taxes and all costs and expenses with respect thereto, to
which such Lyondell Trust may become subject, except for United States
withholding taxes. The foregoing obligations of the Company under each
Declaration are for the benefit of, and shall be enforceable by, any person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice thereof. Any such
Creditor may enforce such obligations of the Company directly against the
Company, and the Company has irrevocably waived any right or remedy to require
that any such Creditor take any action against any Lyondell Trust or any other
person before proceeding against the Company. The Company shall be subrogated
to all rights of a Lyondell Trust in respect of any amounts paid to any
Creditor by the Company. The Company has agreed in each Declaration to execute
such additional agreements as may be necessary or desirable in order to give
full effect to the foregoing.
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DESCRIPTION OF THE PREFERRED SECURITIES
Pursuant to its Declaration, each Lyondell Trust may issue, upon
authorization of its Regular Trustees, from time to time, only one series of
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. Each Declaration will be qualified as an indenture under the
Trust Indenture Act. The Preferred Securities will have such terms, including
distributions, redemption, voting, liquidation rights and such other
preferred, deferred or other special rights or such restrictions as shall be
set forth in the related Declaration or made part of such Declaration by the
Trust Indenture Act. Reference is made to the Prospectus Supplement relating
to the Preferred Securities of a Lyondell Trust for specific terms, including
(i) the specific designation of such Preferred Securities, (ii) the number of
Preferred Securities issued by such Lyondell Trust, (iii) the annual
distribution rate (or method of calculation thereof) for Preferred Securities
issued by such Lyondell Trust, the date or dates upon which such distributions
shall be payable and the record date or dates for the payment of such
distributions, (iv) whether distributions on the Preferred Securities issued
by such Lyondell Trust shall be cumulative, and, in the case of Preferred
Securities having such cumulative distribution rights, the date or dates or
method of determining the date or dates from which distributions on Preferred
Securities issued by such Lyondell Trust shall be cumulative, (v) the amount
or amounts which shall be paid out of the assets of such Lyondell Trust to the
holders of Preferred Securities of such Lyondell Trust upon voluntary or
involuntary dissolution, winding-up or termination of such Lyondell Trust,
(vi) the obligation or right, if any, of such Lyondell Trust to purchase or
redeem Preferred Securities issued by such Lyondell Trust and the price or
prices at which, the period or periods within which and the terms and
conditions upon which Preferred Securities issued by such Lyondell Trust shall
or may be purchased or redeemed, in whole or in part, pursuant to such
obligation or right, (vii) the voting rights, if any, of Preferred Securities
issued by such Lyondell Trust in addition to those required by law, including
the number of votes per Preferred Security and any requirement for the
approval by the holders of Preferred Securities or of Preferred Securities
issued by one or more Lyondell Trusts, or of both, as a condition to specified
actions or amendments to the Declaration of such Lyondell Trust, (viii) terms
for any conversion or exchange into other securities, (ix) the rights, if any,
to defer distributions on the Preferred Securities by extending the interest
payment period on the Subordinated Debt Trust Securities and (x) any other
relevant terms, rights, preferences, privileges, limitations or restrictions
of the Preferred Securities issued by such Lyondell Trust consistent with the
Declaration of such Lyondell Trust or with applicable law. All Preferred
Securities offered hereby will be guaranteed by the Company as and to the
extent set forth below under "Description of the Preferred Securities
Guarantees." Certain United States federal income tax considerations
applicable to any offering of Preferred Securities will be described in the
Prospectus Supplement relating thereto.
In connection with the issuance of the Preferred Securities, each Lyondell
Trust will issue one series of Common Securities. The Declaration of each
Lyondell Trust authorizes the Regular Trustees of such Lyondell Trust to issue
on behalf of such Lyondell Trust one series of Common Securities having such
terms including distribution, redemption, voting or liquidation rights or such
restrictions as shall be set forth therein. The terms of the Common Securities
issued by a Lyondell Trust will be substantially identical to the terms of the
Preferred Securities issued by such Lyondell Trust and the Common Securities
will rank pari passu, and payments will be made thereon on a Pro Rata Basis
with the Preferred Securities except that if a Declaration Event of Default
occurs and is continuing, the rights of the holders of such Common Securities
to payment in respect of distributions and payments upon liquidation,
redemption and maturity will be subordinated to the rights of the holders of
such Preferred Securities. The Common Securities issued by a Lyondell Trust
will also carry the right to vote and to appoint, remove or replace any of the
Trustees of such Lyondell Trust. All of the Common Securities issued by a
Lyondell Trust will be directly or indirectly owned by the Company.
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DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of the Preferred Securities Guarantees that
will be executed and delivered by the Company for the benefit of the holders
from time to time of Preferred Securities. Each Preferred Securities Guarantee
will be separately qualified under the Trust Indenture Act and will be held by
The First National Bank of Chicago, acting in its capacity as indenture
trustee with respect thereto, for the benefit of holders of the Preferred
Securities of the applicable Lyondell Trust. The terms of each Preferred
Securities Guarantee will be those set forth in such Preferred Securities
Guarantee and those made part of such Guarantee by the Trust Indenture Act.
This description summarizes the material terms of the Preferred Securities
Guarantees and is qualified in its entirety by reference to the form of
Preferred Securities Guarantee, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and the Trust
Indenture Act.
General
Pursuant to each Preferred Securities Guarantee, the Company will
irrevocably and unconditionally agree, to the extent set forth therein, to pay
in full, to the holders of the Preferred Securities issued by a Lyondell
Trust, the Guarantee Payments (as defined herein) (without duplication of
amounts theretofore paid by such Lyondell Trust), as and when due, regardless
of any defense, right of set-off or counterclaim that such Lyondell Trust may
have or assert. The following payments or distributions with respect to
Preferred Securities issued by a Lyondell Trust to the extent not paid or made
by or on behalf of such Lyondell Trust will be subject to such Preferred
Securities Guarantee (without duplication): (i) any accumulated and unpaid
distributions on such Preferred Securities, and the redemption price,
including all accumulated and unpaid distributions to, but excluding, the date
of redemption, with respect to such Preferred Securities called for redemption
by such Lyondell Trust but if and only to the extent that in each case the
Company has made a payment to the related Property Trustee of interest or
principal, or premium, if any, on the Subordinated Debt Trust Securities
deposited in such Lyondell Trust as trust assets and (ii) upon a voluntary or
involuntary dissolution, winding-up or termination of such Lyondell Trust
(other than in connection with the distribution of Subordinated Debt Trust
Securities to the holders of such Preferred Securities in exchange for
Preferred Securities or the redemption of all of such Preferred Securities
upon the maturity or redemption of the Subordinated Debt Trust Securities),
the lesser of (a) the aggregate of the liquidation amount and all accumulated
and unpaid distributions on such Preferred Securities to the date of payment,
to the extent such Lyondell Trust has funds on hand legally available
therefor, and (b) the amount of assets of such Lyondell Trust remaining
available for distribution to holders of such Preferred Securities in
liquidation of such Lyondell Trust as required by applicable law (the
"Guarantee Payments"). The Company's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Company to
the holders of such Preferred Securities or by causing the applicable Lyondell
Trust to pay such amounts to such holders.
The Preferred Securities Guarantee is a guarantee from the time of issuance
of the applicable Preferred Securities, but the Preferred Securities Guarantee
covers distributions and other payments on such Preferred Securities only if
and to the extent that the Company has made a payment to the Property Trustee
of interest or principal, or premium, if any, on the Subordinated Debt Trust
Securities deposited in the applicable Lyondell Trust as trust assets. If the
Company does not make interest or principal, or premium, if any, payments on
the Subordinated Debt Trust Securities deposited in the applicable Lyondell
Trust as trust assets, the Property Trustee will not make distributions on the
Preferred Securities of such Lyondell Trust and the Lyondell Trust will not
have funds available therefor.
The Company's obligations under the Declaration for each Lyondell Trust, the
Preferred Securities Guarantee issued with respect to Preferred Securities
issued by such Trust, the Subordinated Debt Trust Securities purchased by such
Lyondell Trust and the Indenture, in the aggregate, will provide a full and
unconditional guarantee on a subordinated basis by the Company of payments due
on the Preferred Securities issued by such Lyondell Trust.
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Certain Covenants of the Company
In each Preferred Securities Guarantee, the Company will covenant that, so
long as any Preferred Securities issued by the applicable Lyondell Trust
remain outstanding, the Company will not declare or pay any dividends on, or
redeem, purchase, acquire or make a distribution or liquidation payment with
respect to, any of its common stock or preferred stock (other than (a)
dividends or distributions in shares of, or options, warrants, rights to
subscribe for or purchase shares of, common stock of the Company, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) as a result of a reclassification of the Company's capital stock or the
exchange or the conversion of one class or series of the Company's capital
stock for another class or series of the Company's capital stock, (d) the
payment of accrued dividends and the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
or (e) purchases of the Company's common stock related to the issuance of the
Company's common stock or rights under any of the Company's benefit plans for
its directors, officers or employees, any of the Company's dividend
reinvestment plans or stock purchase plans, or any of the benefit plans of any
of the Company's affiliates for such affiliates' directors, officers or
employees) or make any guarantee payment with respect thereto, if at such time
(i) the Company shall be in default with respect to its Guarantee Payments or
other payment obligations under such Preferred Securities Guarantee, (ii)
there shall have occurred any Declaration Event of Default under the
applicable Declaration or (iii) the Company shall have given notice of its
election to defer payments of interest on the Subordinated Debt Trust
Securities by extending the interest payment period as provided in the terms
of the Subordinated Debt Trust Securities deposited in such Lyondell Trust as
trust assets and such period, or any extension thereof, is continuing. In
addition, so long as any Preferred Securities of a Lyondell Trust remain
outstanding, the Company has agreed (i) to remain the sole direct or indirect
owner of all of the outstanding Common Securities of such Lyondell Trust and
not to cause or permit such Common Securities to be transferred except to the
extent permitted by the applicable Declaration; provided that any permitted
successor of the Company under the Indenture may succeed to the Company's
ownership of such Common Securities and (ii) to use reasonable efforts to
cause such Lyondell Trust to continue to be treated as a grantor trust for
United States federal income tax purposes except in connection with a
distribution of Subordinated Debt Trust Securities to the holders of such
Preferred Securities as provided in the applicable Declaration.
Amendments and Assignment
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities in any material respect (in which case no
consent will be required), each Preferred Securities Guarantee may be amended
only with the prior approval of the Company and the holders of not less than a
majority in liquidation amount of the outstanding Preferred Securities issued
by the applicable Lyondell Trust. The manner of obtaining any such approval of
holders of such Preferred Securities will be set forth in an accompanying
Prospectus Supplement. All guarantees and agreements contained in a Preferred
Securities Guarantee shall bind the successors, assignees, receivers, trustees
and representatives of the Company and shall inure to the benefit of the
holders of the Preferred Securities of the applicable Lyondell Trust then
outstanding. Except in connection with a consolidation, merger or sale
involving the Company that is permitted under the Indenture, the Company may
not assign its obligations under any Preferred Securities Guarantee.
Termination of the Preferred Securities Guarantee
Each Preferred Securities Guarantee will terminate and be of no further
force and effect as to the Preferred Securities issued by the applicable
Lyondell Trust (i) upon full payment of the redemption price of all Preferred
Securities of such Lyondell Trust, (ii) upon distribution of the Subordinated
Debt Trust Securities to the holders of the Trust Securities of such Lyondell
Trust in exchange for all of the Trust Securities issued by such Lyondell
Trust or (iii) upon full payment of the amounts payable in accordance with the
applicable Declaration upon liquidation of such Lyondell Trust.
Notwithstanding the foregoing, each Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of Preferred Securities issued by the applicable Lyondell
Trust must restore payment of any sums paid with respect to such Preferred
Securities or under such Preferred Securities Guarantee.
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Status of the Preferred Securities Guarantee
The Company's obligation under each Preferred Securities Guarantee to make
the Guarantee Payments will constitute an unsecured obligation of the Company.
The ranking of the Company's obligation under a Preferred Securities Guarantee
will be set forth in the Prospectus Supplement. The Company's obligations
under each Preferred Securities Guarantee are effectively subordinated to all
existing and future liabilities, including trade payables, of the Company's
subsidiaries and Joint Ventures, except to the extent that the Company is a
creditor of the subsidiaries and Joint Ventures and is recognized as such.
Each Declaration provides that each holder of Preferred Securities by
acceptance thereof agrees to the subordination provisions, if any, and other
terms of the related Preferred Securities Guarantee.
Each Preferred Securities Guarantee will constitute a guarantee of payment
and not merely of collection (that is, the guaranteed party may institute a
legal proceeding directly against the guarantor to enforce its rights under
the guarantee without first instituting a legal proceeding against any other
person or entity). Each Preferred Securities Guarantee will be deposited with
the Guarantee Trustee, as indenture trustee, to be held for the benefit of the
holders of the Preferred Securities issued by the applicable Lyondell Trust.
The Guarantee Trustee will have the right to enforce the Preferred Securities
Guarantee on behalf of the holders of the Preferred Securities issued by the
applicable Lyondell Trust. The holders of not less than a majority in
aggregate liquidation amount of the Preferred Securities issued by the
applicable Lyondell Trust will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the related Preferred Securities Guarantee or exercising
any trust or other power conferred upon the Guarantee Trustee under such
Preferred Securities Guarantee. If the Guarantee Trustee fails to enforce such
Preferred Securities Guarantee as above provided, any holder of Preferred
Securities issued by the applicable Lyondell Trust may institute a legal
proceeding directly against the Company to enforce its rights under such
Preferred Securities Guarantee without first instituting a legal proceeding
against the applicable Lyondell Trust, the Guarantee Trustee or any other
person or entity. Notwithstanding the foregoing, if the Company has failed to
make a Guarantee Payment, a holder of Preferred Securities may directly
institute a proceeding against the Company for enforcement of the applicable
Preferred Securities Guarantee for such payment without first instituting a
legal proceeding against the applicable Lyondell Trust, the Guarantee Trustee
or any other person or entity.
Miscellaneous
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under each Preferred Securities Guarantee and as to any default in such
performance. The Company is required to file annually with the Guarantee
Trustee an officers' certificate as to the Company's compliance with all
conditions under each Preferred Securities Guarantee.
The Guarantee Trustee, prior to the occurrence of an event of default under
a Preferred Securities Guarantee and after the curing or waiving of all events
of default that may have occurred, will undertake to perform only such duties
as are specifically set forth in the applicable Preferred Securities
Guarantee, and no implied covenants will be read into such Preferred
Securities Guarantee. After a default with respect to a Preferred Securities
Guarantee has occurred, the Guarantee Trustee shall exercise such of the
rights and powers vested in it by such Preferred Securities Guarantee, and use
the same degree of care and skill in its exercise thereof as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs. Subject to such provision, the Guarantee Trustee is under no
obligation to exercise any of the rights or powers vested in it by a Preferred
Securities Guarantee at the request or direction of any holder of the
applicable Preferred Securities unless it is offered reasonable security and
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
Governing Law
Each Preferred Securities Guarantee will be governed by, and construed in
accordance with, the laws of the State of New York.
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DESCRIPTION OF THE SUBORDINATED DEBT TRUST SECURITIES
Subordinated Debt Trust Securities may be issued from time to time in one or
more series under an Indenture (the "Indenture") between the Company and The
First National Bank of Chicago, as trustee (the "Indenture Trustee"). The
Indenture will be qualified under the Trust Indenture Act. The form of the
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. The following description summarizes the
material terms of the Indenture, and is qualified in its entirety by reference
to the Indenture and the Trust Indenture Act. Whenever particular provisions
or defined terms in the Indenture are referred to herein, such provisions or
defined terms are incorporated by reference herein. Section and article
references used herein are references to provisions of the Indenture.
General
The Subordinated Debt Trust Securities will be unsecured, subordinated
obligations of the Company. The Indenture does not limit the amount of
additional indebtedness the Company or any of its subsidiaries or Joint
Ventures may incur. Since the Company is a holding company, the Company's
rights and the rights of its creditors, including the holders of Subordinated
Debt Trust Securities, to participate in the assets of any subsidiary or Joint
Venture upon the latter's liquidation or recapitalization will be subject to
the prior claims of the subsidiary's or Joint Venture's creditors, except to
the extent that the Company may itself be a creditor with recognized claims
against the subsidiary or Joint Venture.
The Indenture does not limit the aggregate principal amount of indebtedness
that may be issued thereunder and provides that Subordinated Debt Trust
Securities may be issued thereunder from time to time in one or more series.
The Subordinated Debt Trust Securities are issuable in one or more series
pursuant to an indenture supplemental to the Indenture.
In the event Subordinated Debt Trust Securities are issued to a Lyondell
Trust in connection with the issuance of Trust Securities by such Lyondell
Trust, such Subordinated Debt Trust Securities subsequently may be distributed
pro rata to the holders of such Trust Securities in connection with the
dissolution of such Lyondell Trust at the election of Lyondell or upon the
occurrence of certain events described in the Prospectus Supplement relating
to such Trust Securities. Only one series of Subordinated Debt Trust
Securities will be issued to each Lyondell Trust in connection with the
issuance of the Trust Securities by such Lyondell Trust.
Reference is made to the Prospectus Supplement which will accompany this
Prospectus for the following terms of the series of Subordinated Debt Trust
Securities being offered thereby (to the extent such terms are applicable to
the Subordinated Debt Trust Securities of such series): (i) the specific
designation of such Subordinated Debt Trust Securities, aggregate principal
amount, purchase price and premium, if any; (ii) any limit on the aggregate
principal amount of such Subordinated Debt Trust Securities; (iii) the date or
dates on which the principal of such Subordinated Debt Trust Securities is
payable and the right to shorten, extend or defer such date or dates; (iv) the
rate or rates at which such Subordinated Debt Trust Securities will bear
interest or the method of calculating such rate or rates, if any; (v) the date
or dates from which such interest shall accrue, the interest payment dates on
which such interest will be payable or the manner of determination of such
interest payment dates and the record dates for the determination of holders
to whom interest is payable on any such interest payment dates; (vi) the
right, if any, to extend or defer the interest payment periods and the
duration of such extension; (vii) the period or periods within which, the
price or prices at which, and the terms and conditions upon which, such
Subordinated Debt Trust Securities may be redeemed, in whole or in part, at
the option of the Company; (viii) the obligation, if any, of the Company to
redeem or purchase such Subordinated Debt Trust Securities pursuant to any
sinking fund or analogous provisions (including payments made in cash in
anticipation of future sinking fund obligations) or at the option of the
holder thereof and the period or periods for which, the price or prices at
which, the currency or currencies (including currency unit or units) in which
and the terms and conditions upon which, such Subordinated Debt Trust
Securities will be redeemed or purchased, in whole or part, pursuant to such
obligation; (ix) any exchangeability, conversion or prepayment provisions of
the Subordinated Debt Trust Securities; (x) any applicable United States
federal income tax consequences, including
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whether and under what circumstances the Company will pay additional amounts
on the Subordinated Debt Trust Securities held by a person who is not a U.S.
person in respect of any tax, assessment or governmental charge withheld or
deducted and, if so, whether the Company will have the option to redeem such
Subordinated Debt Trust Securities rather than pay such additional amounts;
(xi) the form of such Subordinated Debt Trust Securities; (xii) if other than
denominations of $25 or any integral multiple thereof, the denominations in
which such Subordinated Debt Trust Securities will be issuable; (xiii) any and
all other terms with respect to such series, including any modification of or
additions to the events of default or covenants provided for with respect to
such series, and any terms which may be required by or advisable under
applicable laws or regulations not inconsistent with the Indenture; (xiv)
whether such Subordinated Debt Trust Securities are issuable as a global
security, and in such case, the identity of the depositary; and (xv) the
definition of Senior Debt with respect to such series of Subordinated Debt
Trust Securities. (Section 2.01)
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Subordinated Debt Trust Securities will be issued in United States dollars
in fully registered form without coupons in denominations of $25 or integral
multiples thereof. Subordinated Debt Trust Securities may be presented for
exchange and Subordinated Debt Trust Securities in registered form may be
presented for transfer in the manner, at the places and subject to the
restrictions set forth in the Subordinated Debt Trust Securities and the
Prospectus Supplement. Such services will be provided without charge, other
than any tax or other governmental charge payable in connection therewith, but
subject to the limitations provided in the Subordinated Debt Trust Securities.
Subordinated Debt Trust Securities may bear interest at a fixed rate or a
floating rate. Subordinated Debt Trust Securities bearing no interest or
interest at a rate that at the time of issuance is below the prevailing market
rate will be sold at a discount below their stated principal amount. Special
United States federal income tax considerations applicable to any such
discounted Subordinated Debt Trust Securities or to certain Subordinated Debt
Trust Securities issued at par which are treated as having been issued at a
discount for United States federal income tax purposes will be described in
the relevant Prospectus Supplement.
Certain Covenants of the Company Applicable to the Subordinated Debt Trust
Securities
If Subordinated Debt Trust Securities are issued to a Lyondell Trust in
connection with the issuance of Trust Securities by such Lyondell Trust, the
Company will covenant in a supplemental indenture that, so long as the
Preferred Securities issued by the applicable Lyondell Trust remain
outstanding, the Company will not declare or pay any dividends on, or redeem,
purchase, acquire or make a distribution or liquidation payment with respect
to, any of its common stock or preferred stock (other than (a) dividends or
distributions in shares of, or options, warrants, rights to subscribe for or
purchase shares of, common stock of the Company, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) as a result of a
reclassification of the Company's capital stock or the exchange or the
conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock, (d) the payment of accrued
dividends and the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged, or (e) purchases
of the Company's common stock related to the issuance of the Company's common
stock or rights under any of the Company's benefit plans for its directors,
officers, employees, or any of the Company's dividend reinvestment plans or
stock purchase plans, or any of the benefit plans of any of the Company's
affiliates for such affiliates' directors, officers or employees) or make any
guarantee payment with respect thereto, if at such time (i) the Company shall
be in default with respect to its Guarantee Payments or other payment
obligations under the related Preferred Securities Guarantee, (ii) there shall
have occurred any Indenture Event of Default with respect to the Subordinated
Debt Trust Securities deposited in such Lyondell Trust as trust assets or
(iii) the Company shall have given notice of its election to defer payments of
interest on the Subordinated Debt Trust Securities by extending the interest
payment period as provided in the terms of the Subordinated Debt Trust
Securities deposited in such Lyondell Trust as trust assets and such period,
or any extension thereof, is continuing. In addition, if Subordinated Debt
Trust Securities are issued to a Lyondell Trust in connection with the
issuance of Trust
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Securities by such Lyondell Trust, for so long as any Preferred Securities
issued by the applicable Lyondell Trust remain outstanding, the Company has
agreed (i) to remain the sole direct or indirect owner of all of the
outstanding Common Securities issued by the applicable Lyondell Trust and not
to cause or permit such Common Securities to be transferred except to the
extent permitted by the applicable Declaration; provided that any permitted
successor of the Company under the Indenture may succeed to the Company's
ownership of the Common Securities issued by the applicable Lyondell Trust,
(ii) to comply fully with all of its obligations and agreements contained in
the related Declaration and (iii) to use reasonable efforts to cause the
applicable Lyondell Trust to continue to be treated as a grantor trust for
United States federal income tax purposes except in connection with a
distribution of Subordinated Debt Trust Securities to holders of Preferred
Securities issued by the applicable Lyondell Trust as provided in the related
Declaration.
Subordination
The payment of principal of, premium, if any, and interest on the
Subordinated Debt Trust Securities will, to the extent and in the manner set
forth in the Indenture, be subordinated in right of payment to the prior
payment in full, in cash or cash equivalents, of all Senior Debt of the
Company whether outstanding on the date of this Prospectus or thereafter
incurred.
Upon any payment by the Company or distribution of assets of the Company to
creditors upon any liquidation, dissolution, winding up, receivership,
reorganization, assignment for the benefit of creditors, marshaling of assets
and liabilities or any bankruptcy, insolvency or similar proceedings of the
Company, the holders of all Senior Debt will first be entitled to receive
payment in full of all amounts due or to become due thereon before the holders
of the Subordinated Debt Trust Securities will be entitled to receive any
payment in respect of the principal of, premium, if any, or interest on the
Subordinated Debt Trust Securities.
In the event and during the continuation of any default by the Company in
the payment of principal, premium, interest or any other payment due on any
Senior Debt, or in the event that the maturity of any Senior Debt has been
accelerated because of a default, then, in either case, no payment shall be
made by the Company with respect to the principal (including redemption
payments) of or premium, if any, or interest on the Subordinated Debt Trust
Securities until such default shall have been cured or waived in writing or
shall have ceased to exist or such Senior Debt shall have been discharged or
paid in full.
In the event of the acceleration of the maturity of the Subordinated Debt
Trust Securities, then no payments shall be made by the Company with respect
to the principal (including redemption payments) of or premium, if any, or
interest on the Subordinated Debt Trust Securities until the holders of all
Senior Debt outstanding at the time of such acceleration shall receive payment
in full of such Senior Debt (including any amounts due upon acceleration).
In the event that, notwithstanding the foregoing, any payment shall be
received by the Indenture Trustee or any holder of Subordinated Debt Trust
Securities when such payment is prohibited by the preceding paragraphs, such
payment shall be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of Senior Debt or their respective representatives,
or to the trustee or trustees under any indenture pursuant to which any of
such Senior Debt may have been issued, as their respective interests may
appear.
By reason of such subordination, in the event of insolvency of the Company,
funds that would otherwise be payable to holders of Subordinated Debt Trust
Securities will be paid to the holders of Senior Debt of the Company to the
extent necessary to pay such Debt in full, and the Company may be unable to
meet fully its obligations with respect to the Subordinated Debt Trust
Securities.
The definition of "Senior Debt" with respect to a series of Subordinated
Debt Trust Securities will be set forth in the Prospectus Supplement.
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<PAGE>
Indenture Events of Default
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Indenture Event
of Default" with respect to each series of Subordinated Debt Trust Securities:
(a) failure for 30 days to pay interest on the Subordinated Debt Trust
Securities of such series when due; provided that a valid extension of the
interest payment period by the Company shall not constitute a default in
the payment of interest for this purpose;
(b) failure to pay principal of or premium, if any, on the Subordinated
Debt Trust Securities of such series when due whether at maturity, upon
redemption, by declaration or otherwise;
(c) failure for 30 days to pay any sinking fund or analogous fund payment
with respect to the Subordinated Debt Trust Securities of such series;
(d) failure duly to observe or perform, in any material respect, any
other covenant or agreement contained in the Indenture with respect to such
series for 90 days after written notice to the Company from the Indenture
Trustee or the holders of at least 25% in principal amount of the
outstanding Subordinated Debt Trust Securities of such series;
(e) certain events in bankruptcy, insolvency or reorganization of the
Company; or
(f) any other Indenture Event of Default applicable to the Subordinated
Debt Trust Securities of such series. (Section 6.01)
In each and every such case, unless the principal of all the Subordinated
Debt Trust Securities of that series shall have already become due and
payable, either the Indenture Trustee or the holders of not less than 25% in
aggregate principal amount of the Subordinated Debt Trust Securities of that
series then outstanding, by notice in writing to the Company (and to the
Indenture Trustee if given by such holders), may declare the principal of all
the Subordinated Debt Trust Securities of that series to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, subject to the subordination provisions of the
Indenture. (Section 6.01)
The holders of a majority in aggregate outstanding principal amount of the
Subordinated Debt Trust Securities of that series have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Indenture Trustee. (Section 6.06) The Indenture Trustee or the holders
of not less than 25% in aggregate outstanding principal amount of the
Subordinated Debt Trust Securities of that series may declare the principal
due and payable immediately upon an Indenture Event of Default with respect to
such series, but the holders of a majority in aggregate outstanding principal
amount of Subordinated Debt Trust Securities of such series may annul and
rescind such declaration and waive the default if the default has been cured
and a sum sufficient to pay all matured installments of interest and principal
otherwise than by acceleration and any premium has been deposited with the
Indenture Trustee. (Sections 6.01 and 6.06)
The holders of a majority in aggregate outstanding principal amount of the
Subordinated Debt Trust Securities of that series may, on behalf of the
holders of all the Subordinated Debt Trust Securities of that series, waive
any past default, except a default in the payment of principal, premium, if
any, or interest (unless such default has been cured and a sum sufficient to
pay all matured installments of interest and principal otherwise than by
acceleration and any premium has been deposited with the Indenture Trustee) or
a call for redemption of the Subordinated Debt Trust Securities of that
series. (Section 6.06) The Company is required to file annually with the
Indenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants under the Indenture. (Section
5.03)
If Subordinated Debt Trust Securities are issued to a Lyondell Trust in
connection with the issuance of Trust Securities of such Lyondell Trust, then
under the applicable Declaration an Indenture Event of Default with respect to
such series of Subordinated Debt Trust Securities will constitute a
Declaration Event of Default.
22
<PAGE>
Modification of the Indenture
From time to time the Company and the Indenture Trustee may, without the
consent of the holders of Subordinated Debt Trust Securities, amend the
Indenture or indentures supplemental thereto for one or more of the following
purposes: (a) to evidence the succession of another corporation or other
entity to the Company under the Indenture and the Subordinated Debt Trust
Securities and the assumption by such successor corporation or other entity of
the obligations of the Company thereunder; (b) to add further covenants,
restrictions, conditions or provisions for the protection of the holders of
Subordinated Debt Trust Securities; (c) to cure any ambiguity or to correct or
supplement any provision which may be defective or inconsistent with any other
provision; (d) to add to, change or eliminate any of the provisions of the
Indenture, provided that any such addition, change or elimination shall become
effective only after there are no such Subordinated Debt Trust Securities of
any series entitled to the benefit of such provision outstanding; (e) to
provide for the issuance of Subordinated Debt Trust Securities in coupon form;
(f) to evidence and provide for the acceptance of a successor trustee; (g) to
qualify or maintain the qualification of the Indenture under the Trust
Indenture Act; (h) to establish the form or terms of a series of Subordinated
Debt Trust Securities; and (i) to make any addition, change or elimination of
any provision of the Indenture that does not adversely affect the rights of
any holder of Subordinated Debt Trust Securities in any material respect.
(Section 9.01)
The Indenture contains provisions permitting the Company and the Indenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the outstanding Subordinated Debt Trust Securities of each
series affected by such modification, to modify the Indenture or any
supplemental indenture affecting the rights of the holders of such
Subordinated Debt Trust Securities; provided that no such modification may,
without the consent of the holder of each outstanding Subordinated Debt Trust
Security affected thereby, (i) extend the fixed maturity of the Subordinated
Debt Trust Securities of any series, reduce the principal amount thereof,
reduce the rate or extend the time of payment of interest thereon, reduce any
premium payable upon the redemption thereof or (ii) reduce the percentage of
Subordinated Debt Trust Securities, the holders of which are required to
consent to any such modification. (Section 9.02)
Book-Entry and Settlement
If any Subordinated Debt Trust Securities of a series are represented by one
or more global securities (each, a "Global Security"), the applicable
Prospectus Supplement will describe the circumstances, if any, under which
beneficial owners of interests in any such Global Security may exchange such
interests for Subordinated Debt Trust Securities of such series and of like
tenor and principal amount in any authorized form and denomination. Principal
of and any premium and interest on a Global Security will be payable in the
manner described in the applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any portion
of a series of Subordinated Debt Trust Securities to be represented by a
Global Security will be described in the applicable Prospectus Supplement.
Consolidation, Merger and Sale
The Indenture will provide that the Company may not consolidate with or
merge into any other person or convey, transfer or lease its properties and
assets substantially as an entirety to any person and may not permit any
person to merge into or consolidate with the Company unless (i) either the
Company will be the resulting or surviving entity or any successor or
purchaser is a corporation, limited liability company, partnership or trust
organized under the laws of the United States of America, any State or the
District of Columbia, and any such successor or purchaser expressly assumes
the Company's obligations under the Subordinated Debt Trust Securities and the
Indenture and (ii) immediately after giving effect to the transaction no Event
of Default, and no event which, after notice or lapse of time or both, would
become an Event of Default shall have occurred and be continuing. (Section
10.01)
23
<PAGE>
Defeasance and Discharge
Under the terms of the Indenture, the Company will be discharged from any
and all obligations in respect of a series of the Subordinated Debt Trust
Securities (except in each case for certain obligations to register the
transfer or exchange of such Subordinated Debt Trust Securities, replace
stolen, lost or mutilated Subordinated Debt Trust Securities of such series,
maintain paying agencies and hold moneys for payment in trust) if (i) the
Company irrevocably deposits with the Indenture Trustee cash or U.S.
Government Obligations or a combination thereof, as trust funds in an amount
certified to be sufficient to pay at maturity (or upon redemption) the
principal of, premium, if any, and interest on all outstanding Subordinated
Debt Trust Securities of such series; (ii) such deposit will not result in a
breach or violation of, or constitute a default under, any agreement or
instrument to which the Company is a party or by which it is bound; (iii) the
Company delivers to the Indenture Trustee an opinion of counsel to the effect
that the holders of the Subordinated Debt Trust Securities of such series will
not recognize income, gain or loss for United States federal income tax
purposes as a result of such defeasance and discharge and that such defeasance
and discharge will not otherwise alter holders' United States federal income
tax treatment of principal, premium and interest payments on such Subordinated
Debt Trust Securities of such series (such opinion must be based on a ruling
of the Internal Revenue Service or a change in United States federal income
tax law occurring after the date of the Indenture, since such a result would
not occur under current tax law); (iv) the Company has delivered to the
Indenture Trustee an officers' certificate and an opinion of counsel, each
stating that all conditions precedent provided for relating to the defeasance
and discharge contemplated by such provision have been complied with; and (v)
no event or condition shall exist that, pursuant to the applicable
subordination provisions, would prevent the Company from making payments of
principal of, premium, if any, and interest on the Subordinated Debt Trust
Securities at the date of the irrevocable deposit referred to above. (Section
11.01)
Governing Law
The Indenture and the Subordinated Debt Trust Securities will be governed by
the laws of the State of New York. (Section 13.05)
Information Concerning the Indenture Trustee
The Indenture Trustee, prior to the occurrence of an Indenture Event of
Default and after the curing of all Indenture Events of Default, undertakes to
perform only such duties as are specifically set forth in the Indenture and,
after an Indenture Event of Default has occurred (which has not been cured or
waived), shall exercise such of the rights and powers vested in it by the
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs. (Section 7.01) Subject to such provision, the
Indenture Trustee is under no obligation to exercise any of the powers vested
in it by the Indenture at the request of any holder of Subordinated Debt Trust
Securities, unless offered reasonable security or indemnity by such holder
against the costs, expenses and liabilities that might be incurred thereby.
(Section 7.02) The Indenture Trustee is not required to expend or risk its own
funds or otherwise incur personal financial liability in the performance of
its duties or in the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or liability
is not reasonably assured to it under the terms of the Indenture or adequate
indemnity against such risk is not reasonably assured to it. (Section 7.01)
The Company and its subsidiaries and Joint Ventures maintain ordinary
banking and trust relationships with the Indenture Trustee and its affiliates.
Miscellaneous
The Company will have the right at all times to assign any of its rights or
obligations under the Indenture to a subsidiary or an affiliate; provided
that, in the event of any such assignment, the Company will remain jointly and
severally liable for all such obligations. Subject to the foregoing, the
Indenture will be binding upon and inure to the benefit of the parties thereto
and their respective successors and assigns. The Indenture provides that it
may not otherwise be assigned by the parties thereto other than by the Company
to a successor or purchaser pursuant to a consolidation, merger, sale or
conveyance permitted by the Indenture. (Section 13.11)
24
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell any series of Subordinated Debt Trust Securities and
each Lyondell Trust may sell its Preferred Securities being offered hereby in
any of three ways (or in any combination thereof): (i) through underwriters or
dealers; (ii) directly to a limited number of purchasers or to a single
purchaser; or (iii) through agents. The Prospectus Supplement with respect to
any Offered Securities will set forth the terms of the offering of such
Offered Securities, including the name or names of any underwriters, dealers
or agents and the respective amounts of such Offered Securities underwritten
or purchased by each of them, the initial public offering price of such
Offered Securities and the proceeds to the Company or the applicable Lyondell
Trust, as the case may be, from such sale, any discounts, commissions or other
items constituting compensation from the Company or the applicable Lyondell
Trust, as the case may be, and any discounts, commissions or concessions
allowed or reallowed or paid to dealers and any securities exchanges on which
such Offered Securities may be listed. Any public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
If underwriters are used in the sale of any Offered Securities, such Offered
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. Such Offered Securities may be either offered to the
public through underwriting syndicates represented by managing underwriters,
or directly by underwriters. Unless otherwise set forth in the Prospectus
Supplement, the obligations of the underwriters to purchase such Offered
Securities will be subject to certain conditions precedent and the
underwriters will be obligated to purchase all of such Offered Securities if
any are purchased.
Offered Securities may be sold directly by the Company or a Lyondell Trust,
as the case may be, or through agents designated by the Company or such
Lyondell Trust, as the case may be, from time to time. Any agent involved in
the offer or sale of Offered Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company or the
applicable Lyondell Trust, as the case may be, 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 or the applicable
Lyondell Trust, as the case may be, will authorize underwriters, dealers or
agents to solicit offers by certain purchasers to purchase Offered Securities
from the Company or the applicable Lyondell Trust, as the case may be, 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.
Agents and underwriters may be entitled under agreements entered into with
the Company and the applicable Lyondell Trust to indemnification by the
Company and the applicable Lyondell Trust 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, the applicable
Lyondell Trust and/or any of their affiliates in the ordinary course of
business.
Certain persons participating in the offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the Offered
Securities. In connection with the offering, the underwriters or agents, as
the case may be, may purchase and sell the Offered Securities in the open
market. These transactions may include overallotment and stabilizing
transactions and purchases to cover syndicate short positions created in
connection with the offering. Stabilizing transactions consist of certain bids
or purchases for the purpose of preventing or retarding a decline in the
market price of the Offered Securities; and syndicate short positions involve
the sale by the underwriters or agents, as the case may be, of a greater
number of Offered Securities than they are required to purchase from the
Company or the applicable Lyondell Trust, as the case may be, in the offering.
The
25
<PAGE>
underwriters may also impose a penalty bid, whereby selling concessions
allowed to syndicate members or other broker-dealers for the Offered
Securities sold for their account may be reclaimed by the syndicate if such
Offered Securities are repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the Offered Securities, which may be higher than the price
that might otherwise prevail in the open market, and, if commenced, may be
discontinued at any time. These transactions may be effected on the New York
Stock Exchange, in the over-the-counter market or otherwise. For a description
of these activities, see "Plan of Distribution" or "Underwriting" in the
relevant Prospectus Supplement.
Unless otherwise indicated in the Prospectus Supplement, the Company does
not intend to list any of the Offered Securities on a national securities
exchange. No assurances can be given that there will be a market for the
Offered Securities.
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus Supplement, certain
matters of Delaware law relating to the validity of the Preferred Securities,
the enforceability of the applicable Declaration and the formation of the
Lyondell Trusts will be passed upon by Richards, Layton & Finger, P.A.,
Wilmington, Delaware, special Delaware counsel to the Lyondell Trusts and the
Company. The validity of the applicable Preferred Securities Guarantee and the
Subordinated Debt Trust Securities offered hereby will be passed upon for the
Company by Baker & Botts, L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements of Lyondell Chemical Company as of
December 31, 1998 and 1997 and for each of the three years in the period ended
December 31, 1998 incorporated in this prospectus by reference to Lyondell
Chemical Company's Annual Report on Form 10-K for the year ended December 31,
1998 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The financial statements of Equistar Chemicals, LP as of December 31, 1998
and 1997 and for the year ended December 31, 1998 and the period from December
1, 1997 (inception) to December 31, 1997 incorporated in this prospectus by
reference to Lyondell Chemical Company's Annual Report on Form 10-K for the
year ended December 31, 1998 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The financial statements of LYONDELL-CITGO Refining LP as of December 31,
1998 and for the year then ended incorporated in this prospectus by reference
from the Annual Report on Form 10-K of Lyondell Chemical Company for the year
ended December 31, 1998 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein
by reference, and have been so incorporated in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
The financial statements of LYONDELL-CITGO Refining LP as of December 31,
1997 and for each of the two years in the period ended December 31, 1997
incorporated in this prospectus by reference to Lyondell Chemical Company's
Annual Report on Form 10-K for the year ended December 31, 1998 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
26
<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"), which can be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549;
and at the regional offices of the Commission at 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and at Seven World Trade Center, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549 at prescribed rates. Information concerning the
operation of the public reference facilities may be obtained by calling 1-800-
SEC-0330. The Commission maintains an Internet web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission (http://www.sec.gov). The
Company's common stock is listed on the New York Stock Exchange, and such
material also can be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.
This Prospectus, which constitutes part of a registration statement on Form
S-3 (the "Registration Statement") filed by the Company and the Lyondell
Trusts with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"), omits certain of the information contained in the
Registration Statement. Reference is hereby made to the Registration Statement
and the exhibits thereto, which may be obtained at the public reference
facilities maintained by the Commission as described in the preceding
paragraph, 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.
No separate financial statements of any Lyondell Trust have been included
herein. The Company and the Lyondell Trusts do not consider that such
financial statements would be material to holders of the Preferred Securities
because each Lyondell Trust is a newly formed special purpose entity, has no
operating history or independent operations and is not engaged in and does not
propose to engage in any activity other than holding as trust assets the
Subordinated Debt Trust Securities and issuing the Trust Securities.
Furthermore, taken together, the Company's obligations under the Subordinated
Debt Trust Securities, the Indenture, the Declarations and the Preferred
Securities Guarantees provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the Preferred Securities. See "The Lyondell Trusts," "Description of the
Preferred Securities," "Description of the Preferred Securities Guarantees"
and "Description of the Subordinated Debt Trust Securities." In addition, the
Company does not expect that the Lyondell Trusts will be filing reports under
the Exchange Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which the Company has filed with the Commission
pursuant to the Exchange Act (File No. 1-10145), are incorporated in this
Prospectus by reference and shall be deemed to be a part hereof:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
(b) The description of the common stock, par value $1.00 per share, of
the Company contained in the Company's Registration Statement on Form 8-A
dated December 16, 1988, as such Registration Statement may be amended from
time to time for the purpose of updating, changing or modifying such
description; and
(c) The description of the Rights to Purchase Common Stock contained in
the Company's Registration Statement on Form 8-A dated December 12, 1995,
as such Registration Statement may be amended from time to time for the
purpose of updating, changing or modifying such description.
27
<PAGE>
All documents filed by the Company and/or the Lyondell Trusts with the
Commission pursuant to Sections 13(a), 13(c), 14 and 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 a part hereof from the date of filing of such document.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document that also is or is deemed
to be incorporated by reference herein 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.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus is
delivered, upon the written or oral request of such person, a copy of any or
all documents that have been incorporated herein by reference (not including
exhibits to the documents that have been incorporated herein by reference
unless such exhibits are specifically incorporated by reference in the
documents this Prospectus incorporates). Requests should be directed to
Corporate Secretary, Lyondell Chemical Company, 1221 McKinney, Houston, Texas
77010 (telephone: (713) 652-7200).
28
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses payable by the Company
in connection with the offering described in this Registration Statement.
<TABLE>
<S> <C>
Registration fee.............................................. $1,180,000
Printing expenses............................................. 300,000
Accounting fees and expenses.................................. 500,000
Legal fees and expenses....................................... 500,000
Trustee fees and expenses..................................... 200,000
Rating agency fees............................................ 200,000
Miscellaneous................................................. 120,000
----------
Total..................................................... $3,000,000
==========
</TABLE>
ITEM 15. Indemnification of Directors and Officers
By-Law Provisions.
The Company's By-Laws provide that the Company will indemnify each of its
officers and directors to the fullest extent authorized by Section 145 of the
General Corporation Law of the State of Delaware. Article V of the By-Laws
reads as follows:
(a) Indemnification of Officers and Directors. The Company shall
indemnify the officers and directors of the Company with respect to all
matters to which Section 145 of the General Corporation Law of the State of
Delaware may in any way relate, to the fullest extent permitted or allowed
by the laws of the State of Delaware, whether or not specifically required,
permitted or allowed by said Section 145. Any repeal or modification of
this Section shall not in any way diminish any rights to indemnification of
such person or the obligations of the Company that may have previously
arisen hereunder.
(b) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Section shall not be exclusive of any
other right which any person may have or hereafter acquire under any
statute, the Company's Certificate of Incorporation, any By-Law, any
agreement, a vote of Company stockholders or of disinterested Company
directors or otherwise, both as to action in that person's official
capacity and as to action in any other capacity by holding such office, and
shall continue after the person ceases to serve the Company as a director
or officer or to serve another entity at the request of the Company.
(c) Insurance. The Company may maintain insurance, at its expense, to
protect itself and any director or officer of the Company or another
corporation, partnership, joint venture, trust or other enterprise against
any expense, liability or loss, whether or not the Company would have the
power to indemnify such person against such expense, liability or loss
under the General Corporation Law of Delaware.
(d) Indemnity Agreements. The Company may from time to time enter into
indemnity agreements with the persons who are members of its Board of
Directors, its elected officers and with such other persons as the Board
may designate, the form of such indemnity agreements to be approved by a
majority of the Board of Directors then in office.
(e) Indemnification of Employees and Agents of the Company. The Company
may, under procedures authorized from time to time by the Board of
Directors, grant rights to indemnification, and to payment by the Company
of the expenses incurred in defending any proceeding in advance of its
final disposition to any employee or agent of the Company to the fullest
extent of the provisions of this Article V.
II-1
<PAGE>
Delaware General Corporation Law Provisions.
Section 145 of the General Corporation Law of the State of Delaware
provides:
(a) A corporation shall have power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by the
person in connection with such action, suit or proceeding if the person
acted in good faith and in a manner the person reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
the person's conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
the person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the person's conduct was
unlawful.
(b) A corporation shall have power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection with the defense or
settlement of such action or suit if the person acted in good faith and in
a manner the person reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the present or former director, officer, employee or agent is proper in
the circumstances because the person has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (2) by a committee of such directors
designated by majority vote of such directors, even though less than a
quorum, or (3) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (4) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative, or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the corporation as authorized in this
section. Such expenses (including attorneys' fees) incurred by former
directors and officers and other employees and agents may be so paid upon
such terms and conditions, if any, as the corporation deems appropriate.
II-2
<PAGE>
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in such person's official capacity and as to action in another capacity
while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not
the corporation would have the power to indemnify such person against such
liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan;
and references to "serving at the request of the corporation" shall include
any service as a director, officer, employee or agent of the corporation
which imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in
a manner such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court of
Chancery may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees).
Certificate of Incorporation Provisions.
The Company's Certificate of Incorporation limits the personal liability of
directors to the Company and its stockholders for monetary damages resulting
from certain breaches of the directors' fiduciary duties. Article VII of the
Certificate of Incorporation provides as follows:
To the fullest extent permitted by the General Corporation Law of
Delaware as the same exists or may hereafter be amended, a director of the
Company shall not be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director. If the General
Corporation Law of Delaware is amended to authorize corporate action
further eliminating or limiting the personal liability of directors, then
the liability of a director of the Company shall be eliminated or limited
to the fullest extent permitted by the General Corporation Law of Delaware,
as so amended. Any repeal or modification of this Article VII by the
stockholders of the Company shall not adversely affect any right or
protection of a director of the
II-3
<PAGE>
Company existing at the time of such repeal or modification or with respect
to events occurring prior to such time. Notwithstanding anything contained
in this Certificate to the contrary, the affirmative vote of the holders of
not less than 66 2/3 percent of all votes entitled to be cast by the
holders of stock of the Company shall be required to amend or repeal this
Article VII or to adopt any provision inconsistent herewith.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a corporation's Certificate of Incorporation may contain the
following:
(7) A provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such provision shall
not eliminate or limit the liability of a director: (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders; (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) under section 174 of this
title; or (iv) for any transaction from which the director derived an
improper personal benefit. No such provision shall eliminate or limit the
liability of a director for any act or omission occurring prior to the date
when such provision becomes effective. All references in this paragraph to
a director shall also be deemed to refer (x) to a member of the governing
body of a corporation which is not authorized to issue capital stock, and
(y) to such other person or persons, if any, who, pursuant to a provision
of the certificate of incorporation in accordance with section 141(a) of
this title, exercise or perform any of the powers or duties otherwise
conferred or imposed upon the board of directors by this title.
ITEM 16. Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
------- -------------------------------------------------------------------
<C> <S>
*1.1 Form of Underwriting Agreement (Debt Securities)
*1.2 Form of Underwriting Agreement (Common Stock and Preferred Stock)
*1.3 Form of Underwriting Agreement (Preferred Securities)
**4.1 Form of Senior Debt Securities Indenture of the Company
**4.2 Form of Subordinated Debt Securities Indenture of the Company
**4.3 Form of Subordinated Debt Trust Securities Indenture between the
Company and The First National Bank of Chicago
**4.4.1 Declaration of Trust of Lyondell Trust I
**4.4.2 Declaration of Trust of Lyondell Trust II
**4.4.3 Declaration of Trust of Lyondell Trust III
**4.5.1 Form of Amended and Restated Declaration of Trust of Lyondell Trust
I
**4.5.2 Form of Amended and Restated Declaration of Trust of Lyondell Trust
II
**4.5.3 Form of Amended and Restated Declaration of Trust of Lyondell Trust
III
**4.6.1 Certificate of Trust of Lyondell Trust I
**4.6.2 Certificate of Trust of Lyondell Trust II
**4.6.3 Certificate of Trust of Lyondell Trust III
**4.7 Form of Preferred Security (included in Exhibits 4.5.1, 4.5.2 and
4.5.3)
*4.8 Form of Supplemental Indenture to Subordinated Debt Trust
Securities Indenture to be used in connection with the issuance of
Subordinated Debt Trust Securities relating to Preferred Securities
*4.9 Form of Subordinated Debt Trust Security (included in Exhibit 4.8)
**4.10 Form of Preferred Securities Guarantee with respect to Preferred
Securities
*4.11 Form of Senior Debt Security
*4.12 Form of Subordinated Debt Security
***4.14 Amended and Restated Certificate of Incorporation of the Company
(filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1996 and incorporated herein by
reference)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
------- -------------------------------------------------------------------
<C> <S>
***4.15 Amended and Restated By-Laws of the Company (filed as an exhibit to
the Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1997 and incorporated herein by reference)
**5.1 Opinion of Baker & Botts, L.L.P.
**5.2.1 Opinion of Richards, Layton & Finger, P.A. relating to Lyondell
Trust I
**5.2.2 Opinion of Richards, Layton & Finger, P.A. relating to Lyondell
Trust II
**5.2.3 Opinion of Richards, Layton & Finger, P.A. relating to Lyondell
Trust III
*8 Opinion of counsel to the Company as to certain tax matters
relative to the Securities offered hereby
**12.1 Statement re Computation of Ratios
**23.1.1 Consent of PricewaterhouseCoopers LLP
**23.1.2 Consent of Deloitte & Touche LLP
**23.2 Consent of Baker & Botts, L.L.P. (included in Exhibit 5.1)
**23.3 Consent of Richards, Layton & Finger, P.A. (included in Exhibits
5.2.1, 5.2.2 and 5.2.3)
**24.1 Powers of Attorney for the Company
**24.2.1 Powers of Attorney for the Company as sponsor, to sign the
Registration Statement on behalf of Lyondell Trust I (included in
Exhibit 4.4.1)
**24.2.2 Powers of Attorney for the Company as sponsor, to sign the
Registration Statement on behalf of Lyondell Trust II (included in
Exhibit 4.4.2)
**24.2.3 Powers of Attorney for the Company as sponsor, to sign the
Registration Statement on behalf of Lyondell Trust III (included in
Exhibit 4.4.3)
*25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of the Senior Trustee under the Senior Debt Securities
Indenture
*25.2 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of the Subordinated Trustee under the Subordinated Debt
Securities Indenture
**25.3 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago as Trustee under (i)
the Subordinated Debt Trust Securities Indenture, (ii) the
Preferred Securities Guarantee of the Company with respect to the
Preferred Securities of Lyondell Trust I, (iii) the Preferred
Securities Guarantee of the Company with respect to the Preferred
Securities of Lyondell Trust II and (iv) the Preferred Securities
Guarantee of the Company with respect to the Preferred Securities
of Lyondell Trust III
**25.4.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago under the Amended
and Restated Declaration of Trust of Lyondell Trust I
**25.4.2 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago under the Amended
and Restated Declaration of Trust of Lyondell Trust II
**25.4.3 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago under the Amended
and Restated Declaration of Trust of Lyondell Trust III
</TABLE>
- --------
* The Company will file as an exhibit to a Current Report on Form 8-K (i) any
underwriting agreement relating to Securities offered hereby, (ii) the
instruments setting forth the terms of any Debt Securities, (iii) any
required opinion of counsel to the Company as to certain tax matters
relative to Securities offered hereby or (iv) any Statement of Eligibility
and Qualification under the Trust Indenture Act of 1939 of the applicable
trustee.
** Previously filed.
*** Incorporated by reference.
II-5
<PAGE>
ITEM 17. Undertakings
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) of the Securities Act if,
in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrants' annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act ("Act") in accordance
with the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Act.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, the State of Texas, on
April 5, 1999.
LYONDELL CHEMICAL COMPANY
/s/ Dan F. Smith
By: _________________________________
Dan F. Smith
President and Chief Executive
Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities indicated and on April 5, 1999.
Signature Title
William T. Butler* Chairman of the Board
- -----------------------------------
(William T. Butler)
/s/ Dan F. Smith President, Chief Executive
- ----------------------------------- Officer and Director
(Dan F. Smith, Principal Executive
Officer)
Travis Engen* Director
- -----------------------------------
(Travis Engen)
Stephen F. Hinchliffe, Jr.* Director
- -----------------------------------
(Stephen F. Hinchliffe, Jr.)
Dudley C. Mecum II* Director
- -----------------------------------
(Dudley C. Mecum II)
Paul R. Staley* Director
- -----------------------------------
(Paul R. Staley)
/s/ Edward W. Rich Vice President,
- ----------------------------------- Finance and
(Edward W. Rich, Principal Treasurer
Financial Officer)
/s/ Van Billet Vice President and
- ----------------------------------- Controller
(Van Billet, Principal Accounting
Officer)
/s/ Jeffrey R. Pendergraft
*By: ______________________________
Jeffrey R. Pendergraft
as Attorney-in-fact
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Lyondell Trust I
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, State of Texas, on April 5,
1999.
LYONDELL TRUST I
By: Lyondell Chemical Company, as
Sponsor
/s/ Jeffrey R. Pendergraft
By:__________________________________
Name: Jeffrey R. Pendergraft
Title:Executive Vice President and
Chief
Administrative Officer
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Lyondell Trust
II certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, State of Texas, on April 5,
1999.
LYONDELL TRUST II
By: Lyondell Chemical Company, as
Sponsor
/s/ Jeffrey R. Pendergraft
By:__________________________________
Name: Jeffrey R. Pendergraft
Title:Executive Vice President and
Chief
Administrative Officer
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Lyondell Trust
III certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, State of Texas, on April 5,
1999.
LYONDELL TRUST III
By: Lyondell Chemical Company, as
Sponsor
/s/ Jeffrey R. Pendergraft
By:__________________________________
Name: Jeffrey R. Pendergraft
Title:Executive Vice President and
Chief
Administrative Officer
II-10
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
------- -------------------------------------------------------------------
<C> <S>
*1.1 Form of Underwriting Agreement (Debt Securities)
*1.2 Form of Underwriting Agreement (Common Stock and Preferred Stock)
*1.3 Form of Underwriting Agreement (Preferred Securities)
**4.1 Form of Senior Debt Securities Indenture of the Company
**4.2 Form of Subordinated Debt Securities Indenture of the Company
**4.3 Form of Subordinated Debt Trust Securities Indenture between the
Company and The First National Bank of Chicago
**4.4.1 Declaration of Trust of Lyondell Trust I
**4.4.2 Declaration of Trust of Lyondell Trust II
**4.4.3 Declaration of Trust of Lyondell Trust III
**4.5.1 Form of Amended and Restated Declaration of Trust of Lyondell Trust
I
**4.5.2 Form of Amended and Restated Declaration of Trust of Lyondell Trust
II
**4.5.3 Form of Amended and Restated Declaration of Trust of Lyondell Trust
III
**4.6.1 Certificate of Trust of Lyondell Trust I
**4.6.2 Certificate of Trust of Lyondell Trust II
**4.6.3 Certificate of Trust of Lyondell Trust III
**4.7 Form of Preferred Security (included in Exhibits 4.5.1, 4.5.2 and
4.5.3)
*4.8 Form of Supplemental Indenture to Subordinated Debt Trust
Securities Indenture to be used in connection with the issuance of
Subordinated Debt Trust Securities relating to Preferred Securities
*4.9 Form of Subordinated Debt Trust Security (included in Exhibit 4.8)
**4.10 Form of Preferred Securities Guarantee with respect to Preferred
Securities
*4.11 Form of Senior Debt Security
*4.12 Form of Subordinated Debt Security
***4.14 Amended and Restated Certificate of Incorporation of the Company
(filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1996 and incorporated herein by
reference)
***4.15 Amended and Restated By-Laws of the Company (filed as an exhibit to
the Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1997 and incorporated herein by reference)
**5.1 Opinion of Baker & Botts, L.L.P.
**5.2.1 Opinion of Richards, Layton & Finger, P.A. relating to Lyondell
Trust I
**5.2.2 Opinion of Richards, Layton & Finger, P.A. relating to Lyondell
Trust II
**5.2.3 Opinion of Richards, Layton & Finger, P.A. relating to Lyondell
Trust III
*8 Opinion of counsel to the Company as to certain tax matters
relative to the Securities offered hereby
**12.1 Statement re Computation of Ratios
**23.1.1 Consent of PricewaterhouseCoopers LLP
**23.1.2 Consent of Deloitte & Touche LLP
**23.2 Consent of Baker & Botts, L.L.P. (included in Exhibit 5.1)
**23.3 Consent of Richards, Layton & Finger, P.A. (included in Exhibits
5.2.1, 5.2.2 and 5.2.3)
**24.1 Powers of Attorney for the Company
**24.2.1 Powers of Attorney for the Company as sponsor, to sign the
Registration Statement on behalf of Lyondell Trust I (included in
Exhibit 4.4.1)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
------- --------------------------------------------------------------------
<C> <S>
**24.2.2 Powers of Attorney for the Company as sponsor, to sign the
Registration Statement on behalf of Lyondell Trust II (included in
Exhibit 4.4.2)
**24.2.3 Powers of Attorney for the Company as sponsor, to sign the
Registration Statement on behalf of Lyondell Trust III (included in
Exhibit 4.4.3)
*25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of the Senior Trustee under the Senior Debt Securities
Indenture
*25.2 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of the Subordinated Trustee under the Subordinated Debt
Securities Indenture
**25.3 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago as Trustee under (i)
the Subordinated Debt Trust Securities Indenture, (ii) the Preferred
Securities Guarantee of the Company with respect to the Preferred
Securities of Lyondell Trust I, (iii) the Preferred Securities
Guarantee of the Company with respect to the Preferred Securities of
Lyondell Trust II and (iv) the Preferred Securities Guarantee of the
Company with respect to the Preferred Securities of Lyondell Trust
III
**25.4.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago under the Amended and
Restated Declaration of Trust of Lyondell Trust I
**25.4.2 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago under the Amended and
Restated Declaration of Trust of Lyondell Trust II
**25.4.3 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago under the Amended and
Restated Declaration of Trust of Lyondell Trust III
</TABLE>
- --------
* The Company will file as an exhibit to a Current Report on Form 8-K (i) any
underwriting agreement relating to Securities offered hereby, (ii) the
instruments setting forth the terms of any Debt Securities, (iii) any
required opinion of counsel to the Company as to certain tax matters
relative to Securities offered hereby or (iv) any Statement of Eligibility
and Qualification under the Trust Indenture Act of 1939 of the applicable
trustee.
** Previously filed.
*** Incorporated by reference.
