Advent International is in talks with Oman about a potential move to inject fresh capital into OQ Chemicals in exchange for a majority stake in the company, people familiar with the matter said.
The private equity firm is proposing to provide as much as $250 million of new equity into OQ Chemicals, according to the people, who asked not to be identified discussing confidential information. A deal would see Advent take control of OQ Chemicals while its current owner, Oman state energy company OQ SAOC, would hold the remainder, they said.
OQ Chemicals has been searching for a solution after OQ recently signaled it wouldn’t be providing any further funds to the business, Bloomberg News has reported. The decision threw plans to refinance the company’s outstanding €475 million (about $507 million) and $435 million term loans coming due this October into disarray.
Advent is still discussing details, including the precise investment amount and stake size, the people said. OQ Chemicals has been studying a range of options, including potential solutions proposed by its creditors, and there’s no certainty of a deal, one of the people said.
Products made by OQ Chemicals are used in cosmetics, lubricants, printing inks and flavorings. Like many in the sector, it has seen a drop in demand as customers reduced inventories, according to a December report from S&P Global Ratings. The company has also faced headwinds in recent years from rising natural gas prices and financing costs.
Representatives for Advent and OQ Chemicals declined to comment, while a spokesperson for OQ couldn’t immediately be reached for comment outside regular business hours in Muscat.
OQ Chemicals, formerly known as Oxea, was owned by Advent until 2013. The private equity firm sold the company, which has production facilities in Europe, the U.S. and China, to OQ for about €1.8 billion (about $1.92 billion), Bloomberg News reported at the time.
The money Advent is proposing to put into OQ Chemicals would be used to pay the company’s bills, settle overdue interest payments and improve its balance sheet, according to the people. Advent’s plan would give OQ Chemicals a longer runway and an opportunity to strike a deal with lenders to roll over debt with amended terms, while also helping the company grow its earnings and cash flow, they said.
The company had been in talks with Apollo Global Management (NYSE: APO) about a private loan to refinance debt.
Advent also has other chemical firms in its portfolio such as Röhm GmbH, which could provide opportunities for strategic tie-ups, the people said.
