Restructuring first for outbound Chinese M&A

Author: | Published: 28 Mar 2011

A Shanghai-listed company has acquired debt-laden BorsodChem, a Hungarian chemicals company, in a landmark debt restructuring and buyout deal. The advanced acquisition strategy is unprecedented in China outbound transactions.

Wanhua Industrial Group initially approached the seller, private equity house Permira, about buying BorsodChem equity outright from existing shareholders. But it was rejected by Permira, which opted for a closed group restructuring process first.

The acquirer, a top producer of polyurethane materials, then sought to use its internal resources to buy the target’s freely traded mezzanine debt, which at the time was experiencing a selloff by investment funds and commercial banks that viewed a lack of progress in restructuring as a sign of depreciating value in debt....