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Hungary to give Permira arm €100 mln loan

Hungarian state-owned development bank MFB will provide a €100 million loan to the chemicals firm BorsodChem which was acquired by British private equity fund Permira in 2006, the Financial Times said.

MFB did not respond to written questions and BorsodChem could not be reached for comment. The loan will be conditional on Permira agreeing with BorsodChem's lenders to restructure debt in ways acceptable to the government, the FT added. BorsodChem, which employs around 3,600, is one of the biggest employers in eastern Hungary and the government earlier this year agreed to provide some support for the firm to avoid layoffs.

Hungary's economy is expected to contract by 6.7% this year and unemployment is seen surging above 10% as the country is one of the hardest hit victims of the global economic crisis in central eastern Europe.

The loan is expected to help BorsodChem complete a major capacity expansion halted in 2008 when demand for its products dropped. (Reuters)