The struggle for the future of OQ Chemicals continues. According to information given to Börsen-Zeitung, several days of negotiations in London between the financial investor Advent and the stakeholders of the company did not result in an outcome. Representatives of the company and the Omani shareholder traveled to the British capital on Wednesday 29 May, and negotiated with the creditors until Friday evening.

Advent's interest in OQ Chemicals is confirmed. The private equity investor was reportedly willing to repurchase its former portfolio company. Advent would then have had to inject fresh equity to enable the original deal with the existing debt capital providers to be implemented again.

These debt investors had provided OQ Chemicals with around 1 billion euros in institutional capital market loans (Term Loan B, TLB), which are due for repayment in October, but cannot be refinanced through conventional means. Originally, the Omani shareholder had agreed to inject fresh equity to extend the maturities. However, over Easter, the Omanis backed out of the deal.

Advent is said to have a good relationship with the Omanis, which is why the private equity investor had exclusivity in the current negotiations, according to a person familiar with the matter. Supposedly there is fundamental agreement between Advent and the Omanis. For the existing shareholders, there is usually little left in such emergency sales. However, theoretically, they could be granted a small residual stake or profit participation.

Nevertheless, there was more of a discussion between Advent and the TLB investors. Neither the private equity investor nor the creditors have much to give away, and Advent seemed to be in a good negotiating position as a potential white knight. The TLB investors reportedly demanded 200 million euros in fresh equity and 100 million euros as shareholder loans from the Omanis.

Advent likely tried to push this amount down as much as possible. Conversely, the creditors would have been keen to increase the interest on the loans so that they would trade back to par. The parties apparently could not come to an agreement on these points. OQ Chemicals and Advent declined to comment.

After the negotiations with Advent initially failed, Chief Restructuring Officer Hans-Joachim Ziems will likely have to initiate an orderly M&A process. The experienced restructuring expert was brought on board in mid-May to lead further negotiations with potential investors. According to Börsen-Zeitung information, other private equity investors have also signaled interest in OQ Chemicals.

For an orderly M&A process to be initiated, the existing debt capital providers would first need to stabilise the company. Whether this occurs through a hard debt-to-equity swap or initially through some form of standstill agreement must now be negotiated by the parties. This moves OQ Chemicals back to square one, as the stabilisation of the company by its debt capital providers was already under discussion after the withdrawal of the Omanis over Easter – before Advent came up with an M&A offer.