Hungary’s debt-ridden chemicals company BorsodChem has announced on Thursday that it has reached a preliminary agreement with Wanhua, setting the terms for the Chinese company’s medium-term role as a minority shareholder in BC. It seems Wanhua has given up its intention to squeeze out Permira and become a majority owner of the Hungarian company.
After three days of intensive negotiations, the management and the majority shareholders of Hungarian chemicals firm BorsodChem signed an agreement in principle with representatives of Wanhua Industrial, a China based holding, which controls Yantai Wanhua.
The parties also reached an agreement on BorsodChem’s debt restructuring plan, which enjoys a strong support by the senior lenders and the Hungarian government.
"This is a very important step for the financial restructuring of BorsodChem and the implementation of our growth plan", stated Wolfgang Büchele, CEO of BorsodChem after the negotiations.
"This result is good for BorsodChem, its customers, suppliers and the employees in particular", Büchele added. "But there is still a long way to go. Several questions remain unresolved for the time being and will be addressed only at a later stage. The delegates agreed on further negotiations in due course to discuss the open questions in a friendly and constructive manner."
The negotiations, which took place in Budapest, were attended by Wolfgang Büchele, representatives of the shareholders Permira and Vienna Capital Partners and Wanhua Industrial, including Chairman Jiansheng Ding.
Last week, in a meeting with senior lenders of BorsodChem the banks expressed their strong support of the current management of BorsodChem and their expectations that the current management continues to operate BorsodChem during the implementation of the growth plan.
The Permira Funds and Vienna Capital Partners (VCP) should remain majority shareholders and continue to exercise operational control, the banks stated. 2009.09.30 14:48
Permira to keep Hungary´s BorsodChem for another 3-4 yrs, the ball is in Wanhua´s court
BC’s current owners, Permira and VCP detailed at a press conference earlier how they imagine the company’s reorganisation should be carried out:
- the Hungarian Development Bank (MFB) would grant a EUR 100 million loan to BC. (The parties did not disclose how large spread above EURIBOR the loan would carry, but Büchele said the interest would be market based and repayment would take place before the clearing of funds extended by the main lenders);
- the main creditors agreed to require only 25% of the interest repayment in cash for two years.
- those who granted the mezzanine loan will convert the loan to capital in full.
- Permira and VCP will inject further EUR 80 m capital into BC
The problem with that was that Yantai Wanhua Polyurethanes, controlling 75% of the mezzanine loan, declared it was against this proposal, as it wanted to acquire BorsodChem and see its current owners withdraw completely.
Later a regrettably ambiguous statement indicated that MFB would back out from behind BorsodChem: 2009.10.02 10:01
Hungary not to help out troubled BorsodChem with loan (3)
Now it seems BC and its owners have managed to tame Wanhua and although BC said some issues are left unresolved, it probably also means that MFB does support Permira’s ideas.
It would be too early to consider the issue closed. It would be interesting to know, for instance, what did Wanhua received in exchange for ditching its goal to become a majority owner in BC.
Nevertheless, it presently seems this time Permira has the upper hand in the battle for BC.