Morgan Grenfell Private Equity, the buy-out firm owned by Deutsche Bank, is set to realise a huge loss on its investment in Vantico, the Luxembourg epoxy resin manufacturer it acquired in 2000 for €1.1bn ($1.2bn), after agreeing a debt-for-equity swap with the company's bondholders.

The company said shareholders, who were originally reported as supplying €330m to finance the buy-out, had agreed to offer 95% of Vantico's ordinary equity to the bondholders. The creditors have also lost heavily, since according to a cash alternative included in the agreement the bonds are now worth only 30% of their face value. They were originally worth €250m.