Cinven loses Photo Europe stake

01 September 2005

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According to recent press reports, Cinven has lost its investment in Photo Europe, the France-based film processing company, which is currently undergoing a financial restructuring. Cinven paid EUR 282m in 2001 to GrandVision, an optical retailer with 390 stores across Europe, for its stake in the photo business, then called Photo Service and Photo Station. The equity portion of the deal was an estimated 30% of this price with Cinven having majority control. Management and Michael Likierman, the co-founder and joint chairman of GrandVision, also took small stakes in Photo Europe. Goldman Sachs, Royal Bank of Scotland and Credit Lyonnais (now merged with Credit Agricole as Calyon) were mandated arrangers of the EUR 180.5m debt package. Seven banks joined the deal in syndication: BNL, Bank of Ireland, Centrabanca, Credit Agricole du Nord, Entenial, IKB and San Paolo IMI.However, although the debt EBITDA multiple was 3.6x 2000Â’s reported figures of about EUR 50m, the company has apparently been unable to meet its targets. The remaining EUR 150m of debt has reportedly become distressed and has been trading at about 70% of book value following news that the company could become restructured under Likierman. Cinven, which declined to comment, has yet to agree to LikiermanÂ’s proposal that will see substantially more control passed over to him. Likierman has teamed up with Orange, the mobile phone subsidiary of France Telecom that will provide a letter of comfort that the refinanced debt package covenants would be met. Orange is understood to be interested in using the photo finishing stores to develop a strategy for printing from its camera phones. The restructuring would involve the current creditors getting 20 cents on the euro in cash, 50% of their loans in new debt and a convertible note worth up to 30 cents depending on the value of the company in 2012.