First Chemical Holding, a vehicle set up by Permira, Europe's largest private equity fund, to purchase Hungarian chemicals company BorsodChem Nyrt, has said in a statement it will continue BorsodChem's €500 million investment strategy.
BorsodChem shareholders approved the strategy, which involves investments to take place between 2007 and 2011, at a general meeting in April. The strategy would boost BorsodChem's TDI capacity from 160,000 tons a year to 250,000 tones by 2009, while raising its annual MDI capacity from 200,000 tons to 400,000 tons by 2011. BorsodChem would not expand its PVC production, but would keep it ready for a future consolidation of the industry according to the strategy.
As a result of the investments, BorsodChem's annual revenue is expected to double to €1.6 billion by 2011. Its EBITDA is expected to grow to €300 million-€400 million during the same period.
The European Commission, in its capacity as the EU competition authority, on Thursday approved First Chemical Holding's buyout offer for BorsodChem. The offer, which is at Ft 3,000 per share, also started Thursday and will be open until December 15. The buyout offer values BorsodChem at Ft 257.5 billion or around €1 billion, or Ft 238.5 billion excluding employee shares. The buyout will be leveraged, with First Chemical Holding shareholders putting up 45% of the purchase price, and covering the rest with bank loans.