Photo Europe's senior bank debt traded in the 50-55 range last week, down from the mid-to-high 60s as the photo developer struggles with digital competition. "The business is not going to go away. The question is how much it is going to be impacted by digital photography," one buysider said. Instead, the company will have to adjust its earnings downwards in order to adapt to the new market trends, he said.
Photo Europe was acquired in 2001 by sponsor Cinven for ¤282 million. It was formerly a unit of GrandVision. According to Markit, Goldman Sachs leads the e130 million bank deal. The company also has ¤50 million of mezzanine debt and ¤80 million in PIK notes.
If a restructuring moves forward, the PIK notes will be written-off while the mezzanine debt is expected to be equitized, he noted. Levels have declined progressively since January. A Cinven spokesman did not return calls. The company will first aim for a pre-bankruptcy solution and is contemplating restructuring options with the various creditors, a European buysider noted.