BorsodChem to pursue state loan amid Yantai Wanhua negotiations

16 October 2009 15:57  [Source: ICIS news]

PRAGUE (ICIS news)--BorsodChem will attempt to resubmit an application for an Hungarian state bail-out loan now that its company ownership issues are being resolved, a source close to isocyanates and polyvinyl chloride (PVC) producer said on Friday.

“With the negotiations over who should own and control the company settling down, the loan could be back in play [as part of the company's recovery plan],” said the source.

Earlier this month – as BorsodChem majority owner Permira Advisers and hostile Chinese investor Yantai Wanhua were at odds over which entity was best placed to take the company forward – the Hungarian government said it would not back a loan of €100m ($149.3m) from state-owned development bank MFB.

A spokesperson for MFB said that if BorsodChem were to resubmit its loan application, it will be considered.

On 15 October, UK-based private equity fund Permira Advisers and methyl di-p-phenylene (MDI) producer Yantai Wanhua announced an agreement in principle that would allow Permira to retain ownership of BorsodChem in the medium term and Yantai Wanhua to take a minority stake in the company in return for writing off a proportion of its mezzanine debt.

The source said that the extent of the stake had yet to be finally arranged.

According to the source, Yantai Wanhua had also been invited to invest capital in BorsodChem and could conceivably become the majority-owner once Permira had achieved its objective of turning the company around to sell it at a profit.

($1 = €0.67)

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By: Will Conroy
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