Form 4: QH Hungary Holdings Restructures and Enters New Variable Prepaid Forward Sale Contracts for Quaker Chemical Corp Shares

QH Hungary Holdings Limited amended existing and entered into new variable prepaid forward sale contracts (VPFs) involving Quaker Chemical Corp shares.

Summary

• QH Hungary Holdings Limited, a subsidiary of Gulf Hungary Holding Korlatolt Felelossegu Tarsasag, amended and restated seven existing variable prepaid forward sale contracts (VPFs) and entered into two new VPFs on May 22, 2024.
• The amended VPFs involve contracts with Citibank N.A. and the Royal Bank of Canada (RBC).
• QH Hungary paid a total of $11,371,227.00 to Citibank and RBC to amend the seven VPFs.
• The new VPFs include one with Citibank for 237,200 shares, where Citibank paid $39,500,675.00 to QH Hungary.
• The other new VPF is with RBC for 158,133 shares, where RBC paid $26,333,784.00 to QH Hungary.
• The settlement of the amended VPFs will occur between May 27, 2026, and August 6, 2026.
• The settlement of the new VPFs will occur between November 28, 2025, and February 10, 2026.
• The number of shares to be delivered at settlement depends on the Settlement Price compared to a Forward Floor Price of $186.3683 and a Forward Cap Price, which varies depending on the specific VPF.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While QH Hungary received a significant payment, they also incurred costs to amend existing contracts and face uncertainty regarding the future value of the shares to be delivered.

Positives

• QH Hungary received substantial payments from Citibank and RBC for entering into new VPFs, totaling $65,834,459.00.
• The restructuring of existing VPFs may provide QH Hungary with more favorable terms or flexibility.

Negatives

• QH Hungary paid a total of $11,371,227.00 to Citibank and RBC to amend the seven VPFs, representing a significant cost.
• The obligation to deliver shares or cash equivalent depending on the settlement price introduces uncertainty.

Risks

• The value of shares delivered or cash paid at settlement depends on the market price of Quaker Chemical Corp shares at that time.
• If the settlement price is below $186.3683, QH Hungary must deliver the maximum number of shares.
• Fluctuations in the share price could impact the overall value received or paid by QH Hungary.

Future Outlook

The future value and outcome of these VPFs depend on the market price of Quaker Chemical Corp shares between November 2025 and August 2026. The number of shares or cash equivalent to be delivered will be determined based on the settlement price at that time.

Industry Context

Variable prepaid forward sale contracts are used by shareholders to monetize their holdings while retaining some potential upside. The use of these contracts by QH Hungary suggests a strategy to manage their investment in Quaker Chemical Corp.

Comparison to Industry Standards

• Variable prepaid forward sale contracts are a relatively common tool used by large shareholders to manage their positions.
• Similar transactions have been undertaken by other major shareholders in publicly traded companies to monetize their holdings while retaining potential upside.
• The specific terms, such as the forward floor price and forward cap price, are negotiated between the parties and depend on market conditions and the specific circumstances of the transaction.

Stakeholder Impact

• Shareholders of Quaker Chemical Corp may be impacted by the potential dilution from the shares to be delivered under the VPFs.
• The transactions could affect the supply and demand dynamics of Quaker Chemical Corp shares.

Key Dates