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EBRD subscribes for 14.7 per cent of Hungary's BorsodChem global offering
The European Bank for Reconstruction and Development (EBRD) is subscribing for 1.5 million new shares as part of the privatisation of BorsodChem Rt, which is expected to reduce the Hungarian State Privatisation and Holding Company's stake in the company from 83.5 per cent to 19.1 per cent. The privatisation, a global offering and associated capital increase, will involve the sale or subscription of up to 7.5 million shares and Global Depository Receipts (GDRs) representing shares, 2.3 million of which will be new shares issued in connection with the capital increase. The shares, with an offer price of US$ 12.45, will give the EBRD a 14.7 per cent stake, equal to an investment of US$ 18.67 million.
Gyuri Karady, Co-Director of the EBRD's Hungary team, said: "This is the first time the Bank has participated in the privatisation of a major Hungarian industrial company via the international capital markets. The transaction reflects the EBRD's strategy in Hungary of facilitating privatisations and financing the capital expenditure programmes of the newly privatised enterprises." He continued: "In the case of BorsodChem the Bank achieves both these objectives by combining a firm subscription of newly issued shares with a stand-by commitment. We hope to undertake further similar transactions this year in Hungary and other countries in the region."
The domestic public and employee offerings of ordinary shares and the international private placement of GDRs was announced in January this year. An application will be made to list the shares on the Budapest Stock Exchange. An application has been made to list the GDRs on the London Stock Exchange with a quotation on SEAQ International. BorsodChem is expected to be the first Hungarian company to obtain a London listing for its GDRs. The Joint Lead Managers of the offering were West Merchant Bank, HBSC Investment Banking and Bank Austria Girocredit. The offer size was increased as a result of strong investor interest and was significantly over-subscribed at the offer price.
BorsodChem is one of Hungary's largest industrial companies and is located in the town of Kazincbarcika, in the north-east of Hungary. In central and eastern Europe it is one of the largest manufacturers and processors of PVC and, outside the former Soviet Union, the only manufacturer of MDI. The company will use the proceeds from the global offering to increase production capacity and improve environmental as well as health and safety standards.
The EBRD was founded in April 1991 to assist the countries of central and eastern Europe and the former Soviet Union with their transition from centrally planned to market economies. To date, the EBRD has approved financing for projects worth more than ECU 1.06 billion in Hungary.
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