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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

BASF CORPORATION, Plaintiff, v. POSM II PROPERTIES PARTNERSHIP, L.P., and POSM II LIMITED PARTNERSHIP, L.P., Defendants.

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C.A. No. 3608-VCS

MEMORANDUM OPINION

Date Submitted: December 9, 2008 Date Decided: March 3, 2009

William M. Lafferty, Esquire, Jay N. Moffitt, Esquire, Justin B. Shane, Esquire, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware; Thomas A. Clare, P.C., Christopher C. Posteraro, Esquire, Beth A. Williams, Esquire, Robert B. Gilmore, Esquire, KIRKLAND & ELLIS LLP, Washington, District of Columbia, Attorneys for Plaintiff and Counterclaim Defendant. Anthony W. Clark, Esquire, Mark S. Chehi, Esquire, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Wilmington, Delaware; Charles W. Schwartz, Esquire, Wallis M. Hampton, Esquire, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Houston, Texas, Attorneys for Defendants and Counterclaim Plaintiffs.

STRINE, Vice Chancellor.

I. Introduction The plaintiff, BASF Corporation, a Delaware corporation, seeks to withdraw from defendant POSM II Limited Partnership, L.P. (the "Partnership"), a Delaware limited partnership, and have its interest in the Partnership bought out. BASF has a contractual right to withdraw if Lyondell Chemical Company or one of Lyondell's affiliates no longer operates the Partnership's petrochemical facility in Channelview, Texas (the "Plant"). Historically, Lyondell both leased the Plant from the Partnership and served as the general partner of defendant POSM II Properties Partnership, L.P. ("POSM II Properties") which is, in turn, the general partner of the partnership. BASF argues that the December 2007 purchase of Lyondell, which was then a public company, by Basell AF S.C.A. changed this situation and triggered BASF's contractual right to have its interest in the Partnership bought out by the general partner, POSM II Properties. In its First Amended and Supplemental Verified Complaint (the "Amended Complaint"), BASF argues that its right to be bought out was triggered either because: (1) the fact that Lyondell has experienced a change in control means that Lyondell is no longer operating the Plant; or (2) as a factual matter, LyondellBasell Industries AF S.C.A., Lyondell's new parent company, is operating the Plant rather than Lyondell. POSM II Properties and the Partnership have moved to dismiss this action, arguing that BASF has no rights upon a change in control of Lyondell and that BASF has not adequately pled that Lyondell no longer operates the Plant. In this opinion, I grant the defendants' motion to dismiss. First, I address BASF's contention that because Lyondell went from a publicly traded company to a wholly
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owned subsidiary of another company, Lyondell ceased to operate the Plant. I conclude that the plain language of the withdrawal provision does not entitle BASF to have its interest bought out simply because Lyondell has experienced a change of control. Rather, BASF only has the right to withdraw if Lyondell or one of its affiliates is no longer operating the Plant. Although Lyondell may now have a single owner of its shares, rather than a large group of public stockholders, as long as Lyondell continues to operate the Plant, POSM II Properties is not obligated to purchase BASF's interest in the Partnership. Next, I turn to BASF's conclusory allegation that LyondellBasell -- Lyondell's parent company -- now operates the Plant, rather than Lyondell itself. This is a conclusory allegation because it is not supported by any pled facts. BASF does not plead that the Plant is no longer managed and operated by managers and employees of Lyondell. Rather, BASF distorts a management report and a set of financial statements of Lyondell's parent corporation that plainly are designed to portray the overall financial and operational situation of LyondellBasell, and excerpts quotes that supposedly suggest that LyondellBasell is directly operating the plant. But, the very documents BASF cites make clear that LyondellBasell is a holding vehicle with no employees or operations of its own. Instead, LyondellBasell's subsidiaries, of which Lyondell is one, conduct LyondellBasell's operations. Of equal importance is the fact that BASF pleads no facts suggesting that Lyondell's separate corporate form should be disregarded. That is, BASF pleads no facts suggesting that Lyondell is not continuing to operate the plant, much less that its parent corporation has so disrespected Lyondell's separate existence that
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Lyondell's veil should be pierced. All that BASF has pled is that Lyondell now has a single owner of its equity rather than many, and that this single owner is in a position to influence Lyondell. Every solvent corporation is subject to influence by its stockholders, when those stockholders use the correct means. The fact that Lyondell now has a single stockholder does not rationally support an inference that Lyondell does not operate anything itself, including the Plant. Accordingly, I grant the defendants' motion to dismiss. II. Factual Background 1 At the center of this litigation is the Partnership, which was formed on July 27, 1990 by the Agreement of Limited Partnership between POSM II Properties, Alberta Gas Chemicals, Inc., and Mobil Chemical Company. The Partnership was created for the sole purpose of "own[ing] a propylene oxide/styrene monomer coproduction plant . . . at a site in Channelview, Texas" and leasing that Plant and the land it was built on to ARCO Chemical Company.2

All facts are drawn from the First Amended and Supplemental Verified Complaint ("Am. Compl."), the exhibits thereto, or BASF's Verified Complaint. See Ct. Ch. R. 10(c) ("A copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes."); AT&T Corp. v. Lillis, 953 A.2d 241, 257 (Del. 2008) ("Under some circumstances, a party may offer earlier versions of its opponent's pleadings as evidence of the facts therein." (quoting 188 LLC v. Trinity Indus., Inc., 300 F.3d 730, 736 (7th Cir. 2002))); Ishimaru v. Fung, 2005 WL 2899680, at ** 9-10 (Del. Ch. Oct. 26, 2005) (considering amendments to a complaint on a motion to dismiss). All reasonable inferences have been drawn in BASF's favor. Conclusory allegations not supported by pled facts, however, have not been accepted as true. 2 Am. Compl. Ex. 1 (Agreement of Limited Partnership (July 27, 1990)) ("Partnership Agreement")

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