Frans Bonhomme Said to Seek Debt Talks After French Law Change

Frans Bonhomme SAS, the plastic pipes company owned by Cinven Ltd., started talks with lenders to renegotiate terms on about 550 million euros ($704 million) of buyout loans after a change in French laws reduced funds available to make a debt prepayment, according to two people with knowledge of the matter.

The company wrote to lenders this week explaining the revised law, which changes levies on employee shareholdings and profit-sharing, will result in a one-time 10 million-euro reduction in cash flow, said the people, who asked not to be identified because the talks are private. As a result, Frans Bonhomme won’t make a so-called excess cash flow payment to lenders when required under its credit pact.

Cinven bought the Joue-les-Tours, France-based company in 2005 for 893 million euros. The private-equity firm raised 816 million euros of loans in 2007, according to data compiled by Bloomberg. Cinven invested 15 million euros into the company last year to help it remain within the terms of its loans, according to one of the people.

The revised rules became law on May 13, according to the website of the French parliament.

A 41 million-euro portion of Frans Bonhomme loans sold in an auction May 15 at about 79 percent of face value, according to three other people, who also asked not to be identified, because the sale was private.

Frans Bonhomme has a leverage ratio of more than 9 times, the people said. Leverage is the measure of debt to earnings before interest, taxes, depreciation and amortization.

The company has 45 million euros of debt under a revolving line of credit and term loan due next year, said the people. A term portion B and C loan, totaling 512.6 million euros mature in 2015 and 2016.

A London-based spokeswoman for Frans Bonhomme, who requested not to be named citing company policy, declined to comment.

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