Wendel Hires Adviser for Review of Cromology's Debt

(Bloomberg) -- Wendel SA is exploring ways to shore up the finances of Cromology, a paint company that’s suffered from a slowdown in the French construction industry, according to people with knowledge of the situation.

The Paris-based buyout firm has hired Rothschild & Co. to review Cromology’s debt structure and negotiate a deal with lenders, said the people, who asked not to be identified because the matter is private. Lenders have appointed Houlihan Lokey Inc. to run an independent review of the paintmaker, they said.

The company had 250.5 million euros ($286.2 million) of net debt at the end of June 2018, according to Wendel’s financial report for the first half. Wendel injected 25 million euros of cash into the business in March, it said. The loans are quoted at about 85 cents on the euro, according to data compiled by Bloomberg.

Representatives for Wendel, Cromology and Houlihan declined to comment. A representative for Rothschild didn’t immediately respond to a request for comment.

Cromology, which makes paint brands including Tollens and Zolpan, has been in Wendel’s portfolio for more than a decade despite a wave of consolidation in the industry. It’s the leading decorative paint company in Italy and No. 2 in France, where some parts of the construction industry have stalled. Poor performance in those countries contributed to a decline in Cromology’s sales in 2017 and the first half of 2018, according to Wendel’s financial statements.

France accounts for about 67 percent of Cromology’s business. Wendel bought into the business banking that spending on home renovations would be a fairly resilient market as the typical homeowner repaints on average every eight years, it said on its website.

PPG Industries Inc. earlier this year highlighted France as a key trouble spot in the European paint market. It said at the half-year stage that sales of architectural coatings in Europe, the Middle East and Africa declined due to “subdued” demand with consumers opting to spend on other things. Thierry Le Henaff, chief executive of French coating-additives maker Arkema SA, said on an investor call on Tuesday that the slowdown in Europe stabilized in recent weeks.

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