Creditors to French vehicle leasing firm Fraikin are hiring debt restructuring advisers after fellow leasing group Petit Forestier announced last month that it is no longer able to acquire the company, sources close to the situation said.
Fraikin, owned by private equity firm CVC Capital Partners, has hired Rothschild to advise it on a potential upcoming debt restructuring, while junior mezzanine holders have hired Lazard, one of the sources said. Senior debt holders have been holding pitches for a restructuring adviser with a decision expected to be made within the next week.
CVC, Rothschild and Lazard declined to comment.
The company has at least €1.4bn of debt, including €900m remaining on a €1bn five-year securitisation that was signed in June 2012, a €70m mezzanine bond, €350m senior holdco debt and an €80m opco bond, the source said.
The failure of the acquisition process came as a surprise to the market and with March 2017 maturities looming the company is aiming to get advisers into place as quickly as possible, the source said.
“It took everyone off guard – Fraikin was literally on no-one’s radar,” he said.
According to a second adviser, Fraikin is unlikely to go through a full blown debt restructuring but instead will result in an amend and extend process.
Credit Agricole acted as lead arranger and Natixis as co-lead arranger on the €1bn financing agreed in 2012, which was backed by long term lease receivables and the residual value of 49,000 trucks in France, UK and Spain managed by Fraikin.
In June last year, Petit Forestier announced it had entered into an exclusivity agreement with the aim to acquire 100% of the Fraikin Group’s share capital from by CVC Capital Partners and Eurazeo, subject to regulatory approval.
The antitrust authorities in Poland and Spain granted their approval in August and October 2016 respectively, but the company ultimately did not gain approval from the French authorities and in January Petit Forestier announced that it had decided not to go ahead with the deal.
CVC acquired Fraikin in February 2007 in a deal that valued the company at €1.35bn with the previous majority shareholder Eurazeo reinvesting €60m alongside CVC.
Since September 2015 the company manages a fleet of 57,000 vehicles, with over 85% of its revenues linked to long term contracts up to nine years.