The move, which follows another bond issue in May last year, would reduce pressure on the company to provide its owners with a return on investment and could allow it to delay their exit through a planned listing on the stock market.
Permira, GS Capital Partners and Schroder Ventures bought Cognis from Henkel in 2001 for around €2.6 billion. Such investments usually last for around four to five years before exiting through an IPO.
But as Cognis enters its fourth year of private ownership, Germany's stock market has shown little sign of picking up.
"The current mood for IPOs is not so good," a Cognis spokesperson told NutraIngredients.com.
"With the notes, we no longer have this acute time pressure," she said.
Cognis has been hit by the downturn in the chemicals industry and high raw material prices, with sales falling 5.6 per cent last year to €2.95 billion. However good volume growth in recent months has improved performance, with total net external sales during the first nine months of 2004 up 3.4 per cent on the prior year to €2,321 million.
The Nutrition & Health unit, along with Cognis' largest business unit Care Chemicals and its polymers and coatings unit Functional Products, have driven the growth.
Sales at the Nutrition & Health unit have climbed 7.4 per cent in the first nine months of 2004 to €217 million, with a strong third quarter boosted by higher sales of sterols and carotenoids, and conjugated linoleic acid.
Adjusted EBITDA for the whole group during the first nine months, excluding restructuring costs and costs related to the sale of its fragrance business, increased to €281 million, 14.7 per cent higher than in 2003.
In an interview with the Financial Times in November, Cognis chief financial officer Arnold Kiel explained that the firm had been able to pass on around 60-70 per cent of the raw material price rises to customers.
While the climate for IPOs is expected to pick up this year, it remains uncertain whether there will be a Cognis listing during 2005. However Kiel has stressed that the timing of an IPO depends more on the stock market environment than on the group's performance.
If the new bond offering goes ahead, it will bring the total payouts to the firm's owners to about €820 million, more than repaying the €480 million equity they invested in 2001.