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State will lend neither directly nor indirectly to BorsodChem

The National Development and Economy Ministry has said in a statement that the state of Hungary will not lend to troubled chemicals company BorsodChem, directly or indirectly.

The state of Hungary expects the owners of the owner of chemicals company BorsodChem to stand by its commitments and preserve jobs in the long term, the ministry said. The state will neither directly nor through the Hungarian development bank MFB nor through any other state role offer loans to the company, it added.

The ministry said it is closely following the events surrounding the company, such as talks between the current owners and creditors, as well as with Chinese investors, but the state does not wish to actively intervene in the present situation, the ministry said, noting that the state is not an owner of the company.

The state has already take several measures involving the company, the ministry said. On July 31, it modified a contract for a development subsidy based on a government decision which allowed the company a grace period for meeting its contractual obligations, including those regarding headcount, for the period of 2009-2011.

If state intervention is necessary to keep jobs at BorsodChem, the government is prepared to negotiate if the company's ownership structure is clear and its lending structure is in order, the ministry said.

China's Wanhua recently purchased about 75% of BorsodChem's mezzanine loans and started talks with the company's owner, private equity company Permira, Econews reported earlier.

Permira took over about €200 million in mezzanine loans when it acquired BorsodChem in 2006. Most of the loans contain options to acquire stakes in BorsodChem.

BorsodChem Chairman-CEO Wolfgang Buchele earlier termed Wanhua's purchase of the debt “hostile.” He also said BorsodChem has reached an agreement with its lending banks and could sign a contract on the restructuring of its debt on October 6, if uncertainty about Yantai Wanhua does not drag the matter out. (MTI – Econews)