LOS ANGELES, Jan. 31, 2002 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) said today that it has agreed in principle to sell its 29.5 percent equity interest in Equistar to Lyondell Chemical Company (NYSE:LYO). Occidental will become the owner of approximately 21 percent of Lyondell.
Occidental will receive 30 to 34 million shares of Lyondell common stock, depending on the price of Lyondell stock at the closing. Occidental also will obtain warrants to purchase an additional 5 million shares at $25 per share, and a payment equal to 7.38 percent of Equistar's cash distribution for 2002 and 2003 of up to a total of $35 million to be paid in cash or stock.
Dr. Ray R. Irani, chairman and chief executive officer of Occidental, said, "These transactions reduce the volatility of our earnings while preserving the economic upside when the petrochemicals industry recovers and is consistent with our strategy of focusing on our oil and gas business. We look forward to continued success in our relationship with Lyondell."
Lyondell is a global manufacturer and marketer of intermediate and performance chemicals. Lyondell is the world's largest producer of propylene oxide and third largest producer of styrene monomer. In addition, Lyondell holds an interest of approximately 59 percent in a US oil refinery with a refining capacity of approximately 268,000 barrels of crude oil per day. Through its ownership in Equistar, Lyondell also is North America's second largest producer of ethylene and propylene and the world's third largest manufacturer of polyethylene.
These transactions, which are expected to close in the second quarter 2002, are subject to regulatory, Lyondell shareholder and other approvals. Millennium Chemicals will have the right to participate in the acquisition of Occidental's portion of Equistar on a ratable basis.
As a result of these transactions, Occidental will record an after-tax loss of approximately $240 million in the fourth quarter 2001. The Equistar interest being sold is valued at $440 million. Occidental also will record a fourth quarter pre-tax environmental charge of $60 million.
Note: This press release contains forward-looking statements regarding the nature and expected results of Occidental's transaction with Lyondell. Actual results are subject to future events and uncertainties -- including, among others, altering or not completing the transaction -- which could materially impact performance.