Budapest - Completion of financial restructuring at Hungarian isocyanate producer BorsodChem Zrt means that Wanhua Industrial Group now owns a 38 percent stake of the Hungarian business, and has an option to purchase the rest of the shares, according to a statement from BorsodChem.
After the 30 June completion of the restructuring, approved by BorsodChem's lender First Chemical (Luxembourg) S.ar.l (FCL, controlled by Permira Funds and VCP Capital Partners), Wanhua will provide BorsodChem with Euro 140 million.
As announced in February 2010, BorsodChem will use this cash to finish building its new 200-kilotonnes-per-annum TDI 2 (toluene diisocyanate) plant, as well as for a new nitric acid plant, and for general corporate purposes.
"The management is pleased that the lenders have signed off the consensual agreement. With this, jobs continue to be safe at BorsodChem and the company is now ready to restart the TDI and nitric acid investments, which are expected to significantly further improve the profitability of the company," commented Wolfgang Büchele, chairman and ceo of BorsodChem, in the company statement.
The restructuring provides BorsodChem with significant further financial flexibility and a solid platform for long term growth, the company added.
In exchange for the funding, Wanhua receives a 38-percent stake in First Chemical Holding Kft. (FCH), the holding company of BorsodChem currently owned by FCL, and a call option to purchase the remaining shares in FCH from the existing shareholders.
"We strongly believe that we have achieved a win-win solution for all stakeholders. We are glad that we have a call option which allows Wanhua to obtain full control of the company," said Jason Ding, chief executive officer of Wanhua Industrial Group, in the BorsodChem statement.
Ding added that BorsodChem has "invited VCP to remain a shareholder in BorsodChem. We believe that Wanhua jointly with BorsodChem can become a dominant player in the global isocyanate industry. We will continue to grow the business locally relying on the expertise of the current management and VCP."
As well as TDI and MDI (methylene diphenyl diisocyanate) BorsodChem makes vinyls (PVC resins and compounds, caustic soda). It sells more than half of its output in Western Europe, but sells also in Central and Eastern Europe and increasingly outside Europe.
Wanhua is the largest isocyanate producer in the Asia Pacific region and says it has "the world's largest and most integrated isocyanate-manufacturing complex coming into production in 2010," at Ningbo, in China. Wanhua sells its products into 40 countries across North America, Europe, Japan, the Middle East and South-East Asia.