By Patrick Raleigh UT On-line/news editorBudapest-BorsodChem Rt's main shareholder, VCP Capital Partners Unternehmensberatungs AG is to offer 67.9-percent of issued share capital in the Kazincbarcika, Hungary-based isocyanates and PVC producer.Vienna-based equity firm VCP will offer up to 47 million shares within a target price range of HUF1775-2075 ($8.75-10.23) per share via an International Secondary Offering (ISO). Full details of pricing are due near the end of September when allocations are also expected to be made, BorsodChem said 15 Sept.VCP, which currently has a 92-percent stake in BorsodChem, will carry out the ISO via a private placement of shares and global depositary receipts. These, it said, will be offered to international and Hungarian institutional investors. BorsodChem will also seek a secondary listing on the Warsaw Stock Exchange, The ISO will increase the free float in BorsodChem stock to 75 percent, from its current 8 percent, said Russell Julius, a spokesman for HSBC Bank plc-global coordinator and of the ISO. The shares will eventually be of interest to a wide section of industrial investors, Julius forecast, adding that the group's capitalisation of Euro600-700 million makes it "bite size for the larger players." At present "the big boys such as Solvay, BASF and Bayer are focused on China but at some point they will look to eastern Europe where BorsodChem is a world class player," the HSBC spokesman commented.BorsodChem is currently extending its market position central and eastern Europe (CEE), where it is the largest PVC manufacturer, the only producer of MDI and a leading producer of TDI. The group's strengths include its well-established presence in the Russian isocyanates market.In the MDI sector, the company operates a 60-ktpa plant at its Kazincbarcika base is planning to start up a 100ktpa unit by the end of 2005. BorsodChem has also lifted its TDI capacity at the site by 33 percent to 80 ktpa, this September, and has long-term plans to raise this further to 100 ktpa.Borsodchem reported 2003 sales of HUF25 167 million for its TDI business and HUF18 955 million for its MDI unit. Total group sales reached HUF132 000 million last year.The group is also on the acquisition trail, armed with Euro100 million from its sale of its interests in TVK and a recent Euro16-million input by VCP, according to Julius. "BorsodChem will be the consolidator in central and eastern Europe," he said, adding that its target acquisitions "are companies entirely within its current business domains."The Hungarian group's earnings are growing much faster than its Western counterparts, said Julius, who forecast its EBITDA to reach around 20 percent over the next two financial years, compared to single-digit for its competitors.BorsodChem's labour costs are 80 percent lower than western European producers operating in the same sector, the HSBC spokesman continued. As an example, he said it had total average labour costs of Euro13 000 per employee, compared to Euro67 000 for BASF.BorsodChem is the largest PVC manufacturer in central and eastern Europe, as well as being the only producer of MDI (methylene diphenyl diisocyanate) and a leading producer of TDI (toluene diisocyanate) in the region.VCP manages its shares in BorsodChem through its subsidiaries CE Oil & Gas Beteiligung und Verwaltung AG and VCP Industrie Beteiligungen AG."
