(Bloomberg) -- Apollo Global Management Inc.’s deal to refinance OQ Chemicals’ $1 billion debt with a private loan is at risk after its Omani shareholder decided not to inject money in the company.

The US fund has been working to provide a new unitranche loan to take out existing debt maturing in October on the condition the German company raises as much as €300 million ($325 million) of equity and shareholder loans, according to people familiar with the matter, who asked not to be named because it’s private. 

Owner OQ SAOC, a company controlled by the Omani government, had previously signaled support for the refinancing plan, but recently decided to walk away from the business, raising the specter of a debt restructuring, Bloomberg News reported on Wednesday.

Read more: OQ Chemicals Loans Dive as Omani Owner Rules Out Equity Boost

Prices of OQ Chemicals loans have dropped this week, according to separate people familiar. Traders are quoting the debt at a discount of about 25% to face value, with a wide spread between bid and ask prices. The loans were quoted just below par last week, they said.

Spokespeople for Apollo and OQ Chemicals declined to comment. Representatives for OQ SAOC didn’t return messages seeking comment.

Law firm Freshfields Bruckhaus Deringer and financial adviser Houlihan Lokey are working with the company, while lenders are preparing to hire advisers before the end of the week, people familiar with the matter said.

OQ Chemicals, which has production facilities in Europe, the US and China, was originally bought by OQ SAOC in 2013 from private equity investor Advent International. The company manufactures chemicals used in cosmetics, lubricants, printing inks and flavorings.

Like many in the sector, OQ Chemicals has seen a drop in demand as its customers reduced their inventories, S&P Global Ratings said in a December report. The company has also faced headwinds in recent years from the increase in natural gas prices and financing costs.

--With assistance from Giulia Morpurgo, Libby Cherry and Ben Bartenstein.

(Updates with last week’s loan quotes.)

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