Permira raises Borsodchem stake to 93% through buyout

Permira bought 58.8 million shares for about Ft 165 billion ($850 million), it said in an e-mailed statement yesterday evening. The offer ended December 15. London-based Permira, which is investing in eastern Europe for the first time, is backing Borsodchem management's plans to invest €500 million ($654 million) to double capacity through 2011 at the company, the region's largest maker of PVC plastic. „The foundations for a long-term investment in Borsodchem have been laid,” said Thomas Jetter, the head of Permira's chemicals decision. „We are giving full support to Borsodchem's investment program, which will turn the company into a European- sized chemicals company from a regional player.” Permira, which on November 14 said its exit from the investment hinges on the execution of the expansion plan, wants to benefit from growing demand for plastics in the region. Eastern Europe's economic growth is outpacing that of the west, driving up the sales of PVC products, such as those used in construction.

Permira, which will withdraw the shares from the Budapest, Warsaw and London stock exchanges, may re-offer them as part of its exit. The London company earlier this month received approval from the Hungarian regulator and the European Union for the buyout and plans to acquire at least 90% of Borsodchem stock by December 22. It is also buying a 52% stake in from Firthlion Ltd., owned by Megdet Rahimkulov, Hungary's richest man, and Vienna Capital Partners, an Austrian investment company. VCP, which has been an investor in Borsodchem since 2001, will remain a 13% owner in the company after the buyout. (Bloomberg)