Hungary's BorsodChem to double MDI output after MCHZ deal

28 April 2000 18:22  [Source: ICIS news]

PRAGUE (CNI)--Hungarian chemicals firm BorsodChem said on Friday that it would be able to double its production of methyl di-p-phenylene isocyanate (MDI) in the next three years after its purchase of the production business of Czech aniline producer Moravske Chemicke Zavody (MCHZ).

BorsodChem has acquired a 97.5 % stake in BorsodChem-MCHZ a new joint venture company formed with MCHZ's former parent company, AliaChem, which will hold the remaining 2.5% for the next five years. The joint venture came into effect on 27 April after the signing of a share purchase agreement on 1 April.

Laszlo Kovacs, chief executive of BorsodChem, told a press conference here that his firm used to buy 80% of its aniline (needed to produce MDI) from MCHZ. BorsodChem's purchases represented at least 40% of MCHZ's aniline production, AliaChem spokesman Miroslav Jilek told CNI.

BorsodChem is believed to have paid $55m (Euro58m) for MCHZ, although neither side was willing to disclose financial details. In early April, the Czech press reported AliaChem's financial director Martin Bartak as saying the price approached $60m.

BorsodChem-MCHZ will take over the production of anilines, amines, technical gas, inorganic acids, salts, fertilisers and glues, along with all but 120 of the 1400 staff at MCHZ's plant, which is based in the unemployment black spot of Ostrava, east Moravia.

No job cuts will be made as a result of the deal, said AliaChem's Jilek. The remaining 120 staff will continue to operate a newly-opened incinerator at MCHZ, he added. The incinerator business has not been transferred to BorsodChem-MCHZ and will remain with the old MCHZ.

Last year, BorsodChem produced 52 000 tonne of MDI, which is used in polyurethane production and formed 35% of BorsodChem's operating profit. The Hungarians' acquisition is part of a three-year Euro235m investment programme, partly funded by a Euro100m syndicated loan.

The AliaChem group, which contains the divisions Synthesia, Fatra, Technoplast, FSG Zlin and MCHZ, was established in January 1999 following the bankruptcy of the Chemapol group. More acquisitions from foreign investors are expected as bankruptcy administrators and some 10 creditor banks continue to restructure the chemical group.

By: Mark Andress
+44 208 652 3214

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