Wanhua to recapitalise BorsodChem, possibly take majority stake

25 February 2010 13:50  [Source: ICIS news]

PRAGUE (ICIS news)--China’s Wanhua Industrial Group is to receive a call option allowing it to obtain a majority stake in BorsodChem within two years after agreeing to invest a total of €140m ($189.9m) in the Hungarian isocyanates producer, the two companies said on Thursday.

The option of taking a controlling stake in BorsodChem, which is held by its owners Permira Advisers and Vienna Capital Partners, would be awarded under a recapitalisation deal that would see Wanhua initially loan €30m to BorsodChem and a further €110m upon the completion of its restructuring, the companies said.

The agreement, reached early today, replaces a preliminary agreement under which Wanhua was only to gain the contractual right to obtain a majority stake in BorsodChem in 2013.

BorsodChem’s owners and Wanhua, which owns methyl di-p-phenylene isocyanate (MDI) producer Yantai Wanhua, have for several months been trying to hammer out a recapitalisation deal for BorsodChem to present to the company’s creditors.

Wanhua won a seat at the negotiating table after becoming a substantial creditor itself by buying up BorsodChem’s mezzanine loans.

The companies would not specify what percentage of those loans would be turned into equity under the new ownership deal.

“The first stage of the reorganisation could be completed by the end of March,” said BorsodChem chairman and CEO Wolfgang Buchele.

At this point, Buchele said, Wanhua would become a minority shareholder in the firm. He declined to disclose the size of the planned minority stake.

The capital from Wanhua would be invested in completing the construction of a 200,000 tonne/year toluene di-isocyanate (TDI) plant and a nitric acid facility at BorsodChem’s main site at Kazincbarcika, Hungary, as well as for “general corporate purposes”, the companies said in a press release.

($1 = €0.74)

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By: Will Conroy
+44 20 8652 3214

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