Cinven is in talks with the main creditors of Frans Bonhomme, a French plastic tube manufacturer it bought in 2005, over the future ownership of the company.
Confronted with cash flow issues over the last four months, Frans Bonhomme has seen portions of its loans acquired by hedge funds including Centerbridge Partners and Angelo Gordon. It is now in discussion with them over how to renegotiate its debt, a source close to the matter told Private Equity International.
Various options are being considered, among which is a possible handover of Frans Bonhomme to its creditors. A report on local daily Les Echos suggests this is the outcome favoured by Cinven, which is eager to avoid lengthy negotiations with the company’s lender.
The firm first invested in Frans Bonhomme in 2000 alongside PAI Partners and Astorg Partners, before exiting the business to Apax Partners in 2003. It then bought the company again 2005, in a €893 million deal understood to include €775 million of debt.
Earlier this year, the impact of a new tax policy required the company to free up €10 million in cash – compounding the already heavy constraints governing its debt arrangement, which requires Frans Bonhomme to repay a sizable portion of its excess cash to lenders. Although the business is profitable, this led it to reach its debt covenants limits, the source explained. As the company’s financial year-end approached, Cinven thus reached out to debt holders to alleviate the pressure being put on the business.
The firm and its lenders, which convened a meeting on 10 July to discuss debt restructuring, are now aiming for a decision on the eventual outcome to be reached by the end of the month. The company’s debt load is understood to stand at around €600 million.
Frans Bonhomme is held in Cinven's Fund III, which reached its final close in 2001 on €4.4 billion.