Exhibit 10.5


                              POOL ACQUISITION S.A.
                             AS SUBORDINATED LENDER



                           SANITEC INTERNATIONAL S.A.
                                   AS COMPANY




                              THE BANK OF NEW YORK
                     AS TRUSTEE FOR THE HOLDERS OF THE NOTES









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                  INTERCOMPANY ON-LOANS SUBORDINATION AGREEMENT

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                                    CONTENTS

CLAUSE                                                                 PAGE



1.       INTERPRETATION...................................................2


2.       SUBORDINATION OF SUBORDINATED LIABILITIES........................4


3.       COVENANTS OF THE SUBORDINATED CREDITORS..........................5


4.       PROHIBITED PAYMENTS..............................................6


5.       SUBROGATION......................................................6


6.       ENFORCEMENT......................................................6


7.       OTHER SECURITY AND DEALINGS......................................7


8.       REALISATION OF DISTRIBUTIONS.....................................7


9.       SUCCESSION.......................................................8


10.      NOTICES, AMENDMENTS, WAIVER......................................8


11.      COUNTERPARTS.....................................................8


12.      PARTIAL INVALIDITY; WAIVER.......................................8


13.      LAW..............................................................9


14.      THIRD PARTY RIGHTS...............................................9


15.      JURISDICTION.....................................................9


16.      FURTHER ASSURANCE...............................................10



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This INTERCOMPANY ON-LOANS SUBORDINATION AGREEMENT (the "AGREEMENT") is made the
7th day of May 2002

BETWEEN:

(1)      POOL ACQUISITION S.A., a public limited liability company organised
         under the laws of Luxembourg (the "SUBORDINATED LENDER"); and

(2)      SANITEC INTERNATIONAL S.A., a public limited liability company
         organised under the laws of Luxembourg (the "COMPANY"); and

(3)      THE BANK OF NEW YORK, acting as Trustee under the Indenture (the
         "TRUSTEE").

WHEREAS:

(A)      The Subordinated Lender directly holds approximately 93% of the capital
         stock of the Company. The Company holds a 100% of the capital stock in
         Pool Acquisition Netherlands B.V. (in liquidation), which holds 100% of
         the capital stock in Sanitec Oy (previously called Pool Acquisition
         Helsinki Oy) ("SANITEC") and Pool Sub-Financing Helsinki Oy. Pool
         Sub-Financing Helsinki Oy holds 100% of the capital stock in Pool
         Financing Helsinki Oy.

(B)      Certain investors (the "INVESTORS") have granted a shareholder loan to
         Sanitec under a Shareholder Loan Agreement (the "SHAREHOLDER LOAN")
         dated 26 April 2001, as amended, for the purpose of financing the
         acquisition of Sanitec Oyj, an entity which has subsequently been
         merged with and into Sanitec.

(C)      Bayerische Hypo- und Vereinsbank AG (the "PIK LENDER") has granted a
         PIK loan to Pool Sub-Financing Helsinki Oy under a PIK Loan Agreement
         (the "PIK LOAN"), dated 17 December 2001, as amended, in the amount of
         (euro)60,000,000.

(D)      Pool Sub-Financing Helsinki Oy as borrower under a EUR 60,000,000 PIK
         On-Loan Agreement I (the "PIK ON-LOAN I"), has lent the proceeds of the
         PIK Loan to Pool Financing Helsinki Oy.

(E)      Pool Financing Helsinki Oy as borrower under a EUR 60,000,000 PIK
         On-Loan Agreement II (the "PIK ON-LOAN II") has lent the proceeds from
         the PIK On-Loan I to Sanitec for the purpose of partially refinancing
         existing debt of Sanitec.

(F)      On the date hereof, the Company will issue 9% Senior Notes due 2012
         pursuant to that certain indenture, dated as of the date hereof (the
         "INDENTURE"), by and



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         between the Company and the Trustee. In connection with the issuance of
         the Notes, it has been agreed that the claims of the Investors under
         the Shareholder Loan and the claims of the PIK Lender under the PIK
         Loan will be structurally subordinated to the claims of the Holders.

(G)      To achieve the subordination referred to in (F) above, the Investors,
         Sanitec, the Company and the Subordinated Lender have agreed by way of
         a Shareholder Loan Transfer and Assumption Agreement, dated as of 2 May
         2002, (the "SHAREHOLDER LOAN TRANSFER AND ASSUMPTION AGREEMENT") to
         establish a structure in which the loan currently made to Sanitec under
         the Shareholder Loan will be granted to the Subordinated Lender, then
         on-lent to the Company under a Luxembourg Shareholder Loan Facility
         Agreement (the "LUXEMBOURG SHAREHOLDER LOAN FACILITY AGREEMENT") and
         then on-lent to Sanitec under a Finnish Shareholder Loan Facility
         Agreement (the "FINNISH SHAREHOLDER LOAN FACILITY AGREEMENT").

(H)      To achieve the structural subordination referred to in (F) above, Pool
         Sub-Financing Helsinki Oy, Pool Financing Helsinki Oy, Sanitec Oy, the
         Company, the Subordinated Lender and the PIK Lender have agreed by way
         of a PIK On-Loan Transfer and Assumption Agreement, dated as of 2 May
         2002, (the "PIK ON-LOAN TRANSFER AND ASSUMPTION AGREEMENT") to
         establish a structure whereby the Subordinated Lender will be the
         initial borrower under the PIK Loan and the Company will be the
         borrower under the PIK On-Loan I and Sanitec the borrower under the PIK
         On-Loan II.

(I)      It has been agreed between the parties hereto that the repayment claims
         of the Subordinated Lender under the Luxembourg Shareholder Loan
         Facility Agreement and the PIK On-Loan I shall be regulated and/or
         subordinated in the manner set out herein.

NOW IT IS HEREBY AGREED as follows:

1.       INTERPRETATION

1.1      In this Agreement:

         "DISCHARGE DATE" means the date on which all Liabilities have been
         fully paid and discharged to the satisfaction of the Trustee (acting
         reasonably), whether or not as a result of an enforcement.

         "DISTRIBUTION" means, in respect of any Person, any payment (whether
         directly or by set-off or otherwise) by or distribution of assets of
         such Person, whether in cash,



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         property, securities or otherwise.

         "EVENT OF DEFAULT" means any event of default (howsoever described)
         under the Senior Notes Documents.

         "HOLDERS" means a Person in whose name a Note is registered.

         "INSOLVENCY EVENT" means, in respect of the Company, that it is subject
         to a bankruptcy, insolvency, winding-up or administration order or a
         voluntary arrangement or that an administrative receiver has been
         appointed or that any event analogous with any of the foregoing has
         occurred under any applicable law.

         "LIABILITIES" means all present and future sums, liabilities and
         obligations payable or owing by the Company to any Holder (whether
         contractual or by operation of law) under, pursuant to or otherwise in
         connection with, the Senior Notes Documents.

         "NOTES" means the Company's 9% Senior Notes due 2012 issued pursuant to
         the Indenture, including the Initial Notes issued on the date hereof
         and any Additional Notes or Exchange Notes issued from time to time
         under the Indenture.

         "PROHIBITED PAYMENTS" means the repayment of all or, from time to time,
         any part of, or the refinancing or restructuring of, any Subordinated
         Liability.

         "SECURITY" means any encumbrance, hypothecation, guarantee, indemnity
         or other security or preferential arrangement, present or future,
         actual or contingent.

         "SENIOR NOTES DOCUMENTS" means the Indenture and the Senior Notes.

         "SUBORDINATED LIABILITIES" means all present and future sums,
         liabilities and obligations payable or owed by the Company to the
         Subordinated Lender under, pursuant to or in connection with the
         Luxembourg Shareholder Loan Facility Agreement and the PIK On-Loan I.

1.2      Terms and expressions defined in the Indenture shall have the same
         meaning in this Agreement except as otherwise defined herein.

1.3      Unless the context or the express provisions of this Agreement
         otherwise require, all references to a party include references to its
         permitted assignees and transferees and its successors in title and
         (where applicable) to any replacement or additional agent or Security
         Agent or Trustee.



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1.4      Save where the contrary is indicated, any reference in this Agreement
         to:

         1.4.1    this Agreement or any other agreement or document shall be
                  construed as a reference to this Agreement or, as the case may
                  be, such other agreement or document as the same may have
                  been, or may from time to time be, amended, varied, novated or
                  supplemented;

         1.4.2    a statute shall be construed as a reference to such statute as
                  the same may have been, or may from time to time be, amended
                  or re-enacted.

1.5      Clause headings are for ease of reference only.

2.       SUBORDINATION OF SUBORDINATED LIABILITIES

2.1      In consideration of the purchase of the Notes by the Holders, the
         Subordinated Lender and the Company hereby agree with the Trustee (on
         behalf of, and for the benefit of, the Holders) and declare as follows:

2.2      Until the Discharge Date, the Subordinated Liabilities shall be
         irrevocably subordinated to all Liabilities and, except with respect to
         payments permitted by Clause 4, subject in right of payment to the
         extent and in the manner hereinafter set forth. The subordination
         effected hereunder shall also apply upon and after the application for
         the commencement of insolvency proceedings or any similar event in
         relation to the Company. The subordination shall continue to be
         effective upon any amendment, supplement, variation or novation of any
         Senior Notes Documents.

2.3      Until the Discharge Date, the Company will not make any prepayment or
         payment (whether in cash, by way of transfer of assets or otherwise) on
         account of, or grant or permit to subsist any Security in respect of,
         the Subordinated Liabilities nor shall the Subordinated Lender, as set
         forth in Clause 6 below, demand or receive any such payment or
         prepayment or Security or to commence any proceedings against the
         Company or take any action in respect of the Subordinated Liabilities
         or any part thereof (including, without limitation, the acceleration,
         termination or cancellation of the Subordinated Liabilities or the
         exercise of any right of set-off, counterclaim or lien or any action or
         step with a view to winding-up the Company).

2.4      In the event of payment, or prepayment (whether in cash, by way of
         transfer of assets or otherwise) being made to the Subordinated Lender,
         or any other action resulting in the receipt of funds by the
         Subordinated Lender with respect to Subordinated Liabilities, or
         Security being held by the Subordinated Lender in breach of Clause 2.3
         or Clause 6, the Subordinated Lender will forthwith pay to the Trustee
         for the benefit of the Holders any sum or other assets which



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         shall have been received by it from the Company in consequence of such
         breach (which sum or other assets shall be deemed not to have reduced
         the liability of the Company to the Subordinated Lender) and until such
         payment or transfer the Subordinated Lender will hold such sums or
         other assets or such Security (as the case may be) on trust for the
         Company provided, however, that these provisions shall not constitute
         or create or be deemed to constitute or create any encumbrance or other
         security interest of any kind.

2.5      Neither the Subordinated Lender nor the Company shall knowingly take or
         omit to take any action whereby the subordination or any rights of the
         Trustee or Holders under this Agreement of the Subordinated Liabilities
         (or any part thereof) as contemplated in this Clause 2 might be
         terminated, impaired or adversely affected.

2.6      Upon an Insolvency Event occurring in respect of the Company:

         2.6.1    the claims of the Subordinated Lender in respect of the
                  Subordinated Liabilities shall be postponed in all respects to
                  the Liabilities;

         2.6.2    the Subordinated Lender shall not, unless otherwise directed
                  by the Trustee, provide for the Subordinated Liabilities until
                  the Liabilities have first been paid or discharged in full
                  (and for all purposes any Distribution from the Company or any
                  of its subsidiaries received by the Trustee shall only be
                  taken to discharge the Liabilities to the extent of the actual
                  amount received);

         2.6.3    if the Subordinated Lender is directed by the Trustee to prove
                  for the Subordinated Liabilities then it shall act in
                  accordance with such directions and shall procure that any
                  resultant Distributions shall be made by the liquidator of the
                  Company, or any other Person making the Distribution, to the
                  Trustee to the extent necessary to repay all the Liabilities
                  in full; and

         2.6.4    the Subordinated Lender hereby irrevocably authorises and
                  directs the Trustee to submit any proof and/or to instruct the
                  relevant liquidator or other Person to make Distributions in
                  respect of the Subordinated Liabilities in accordance with the
                  foregoing.

3.       COVENANTS OF THE SUBORDINATED CREDITORS

3.1      The Subordinated Lender hereby covenants with the Trustee (on behalf of
         and for the benefit of the Holders) that until the Discharge Date it
         will not, save to the extent permitted by Clause 4 (PROHIBITED
         PAYMENTS), (i) assign, pledge or otherwise dispose of the Subordinated
         Liabilities or any part thereof; (ii)


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         purport to set off at any time any amount payable by it to the Company
         against any amount of the Subordinated Liabilities; and (iii) enforce
         any of the Subordinated Liabilities.

3.2      The Subordinated Lender and the Company hereby agree that the
         Subordinated Liabilities shall not be assignable except as otherwise
         expressly permitted by the Indenture.

3.3      The Subordinated Lender and the Company hereby agree not to amend,
         supplement, release, cancel or waive, any term of the Luxembourg
         Shareholder Loan Facility Agreement and the PIK On-Loan I except as
         otherwise expressly permitted by the Indenture.

4.       PROHIBITED PAYMENTS

         Prior to the Discharge Date, the Subordinated Lender shall not request
         a Prohibited Payment and the Company shall not make a Prohibited
         Payment except to the extent that such Payment is expressly permitted
         pursuant to, and is made in accordance with, the terms of the
         Indenture.

5.       SUBROGATION

         The Subordinated Lender hereby agrees, to the extent necessary for the
         Holder to realise the benefits of this Agreement, that the Trustee (on
         behalf of, and for the benefit of, the Holders) will be subrogated to
         the rights and claims under, and with respect of, the Subordinated
         Liabilities. The Subordinated Lender shall do all acts and things
         (including, without limitation, the execution of powers of attorney,
         assignments or other instruments) as are required to effect such
         subrogation.

6.       ENFORCEMENT

         If at any time before the Discharge Date there occurs an event or
         circumstance which entitles the Subordinated Lender to terminate or
         accelerate any Subordinated Liability, or any event giving rise to an
         obligation of the Company to repay any Subordinated Liability, the
         Subordinated Lender shall promptly notify the Trustee of such event but
         the Subordinated Lender shall not:

         (a)      terminate or accelerate any of the Subordinated Liabilities or
                  otherwise declare any of the Subordinated Liabilities
                  prematurely payable or due;

         (b)      enforce the Subordinated Liabilities by attachment, execution
                  or by initiating or supporting any insolvency proceedings;



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         (c)      demand or receive any Security in respect of the Subordinated
                  Liabilities;

         (d)      commence any proceedings against the Company in respect of the
                  Subordinated Liabilities; or

         (e)      take any other enforcement action in respect of the
                  Subordinated Liabilities or any part thereof.

7.       OTHER SECURITY AND DEALINGS

         The Subordinated Lender and the Company hereby agree that the
         subordination hereby effected shall be in addition to and shall not
         prejudice or affect any Security or any right or remedy of the Holders
         in respect of the Liabilities whether from the Company or the
         Subordinated Lender (or either of them) or any other person nor shall
         the provisions hereof be prejudiced or affected by:

         (a)      any Security or right or remedy of the Holders in respect of
                  the Liabilities;

         (b)      any time or indulgence granted by the Holders to the Company
                  or to any other person;

         (c)      any variation, amendment, supplement or extension of the terms
                  of any Security in respect of the Liabilities;

         (d)      any arrangement or compromise made between the Holders or the
                  Trustee and any of the Company or any other person;

         (e)      any dealing with, exchange, release or invalidity of any
                  Security in respect of the Liabilities;

         (f)      any omission on the part of the Holders or the Trustee to
                  enforce any of their rights against any of the Company or any
                  other person or any Security in respect of the Liabilities;

         (g)      the filing for insolvency proceedings in relation to
                  Subordinated Lender and/or the Company; and

         (h)      any other fact or circumstance whatsoever whether or not
                  similar to any of the foregoing which could or might in any
                  way diminish the Subordinated Lender's or the Company's
                  obligations or the rights of the Trustee (for itself and for
                  the benefit of the Holders) under this Agreement.

8.       REALISATION OF DISTRIBUTIONS



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         The Trustee may realise any Distribution in kind received in respect of
         the Subordinated Liabilities, and may convert any amount received in
         respect of the Subordinated Liabilities, into a currency in which the
         Company is liable at its spot rate, and the Liabilities shall not be
         deemed reduced by the Distribution or (as appropriate) conversion
         proceeds are available to be applied towards the Liabilities.

9.       SUCCESSION

         This Agreement is a contract for the benefit of the Holders. The
         Subordinated Lender and the Company each agree that upon any change in
         Trustee pursuant to the Indenture, the relevant successor to the
         Trustee shall become a party to this Agreement by acceding hereto
         without the need of any consent or action of any party hereto.

10.      NOTICES, AMENDMENTS, WAIVER

10.1     Each communication to be made hereunder shall be made in writing but,
         unless otherwise stated, may be made by facsimile or letter.

10.2     Any communication or document to be made or delivered by one person to
         another pursuant to this Agreement shall (unless that other person has
         by written notice to the other parties hereto specified another
         address) be made or delivered to that other person at the addresses as
         set out on the execution pages hereof.

10.3     All amendments or supplements to this Agreement or any waiver with
         regard to this Agreement (including this Clause 10.3) shall be made in
         writing and in accordance with, and in the manner provided for in, the
         Indenture.

11.      COUNTERPARTS

         This Agreement may be executed in any number of counterparts and by the
         different parties hereto on separate counterparts each of which, when
         so executed and delivered, shall be an original but all the
         counterparts shall together constitute but one and the same instrument.

12.      PARTIAL INVALIDITY; WAIVER

12.1     If at any time, one or more of the provisions hereof is or becomes
         invalid, illegal or unenforceable in any respect under the law of any
         jurisdiction, such provision shall as to such jurisdiction, be
         ineffective to the extent necessary without affecting or impairing the
         validity, legality and enforceability of the remaining provisions
         hereof or of such provisions in any other jurisdiction. The parties
         agree that such illegal, invalid or unenforceable provision shall be
         deemed replaced by such provision



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         which comes as close as possible to the purpose of this Agreement.

12.2     No failure to exercise, nor any delay in exercising, on the part of the
         Security Agent or the Trustee, any right or remedy hereunder shall
         operate as a waiver thereof, nor shall any single or partial exercise
         of any right or remedy prevent any further or other exercise thereof or
         the exercise of any other right or remedy. The rights and remedies
         provided hereunder are cumulative and not exclusive of any rights or
         remedies provided by law.

13.      LAW

         This Agreement shall be governed by, and shall be construed in
         accordance with, the laws of England and Wales.

14.      THIRD PARTY RIGHTS

14.1     Subject to Clause 14.2 below, a person who is not a party to this
         Agreement has no right under the Contracts (Rights of Third Parties)
         Act 1999 to enjoy the benefit of, or enforce, any term of this
         Agreement.

14.2     Each Holder may enjoy the benefit of, and enforce, any term of this
         Agreement in accordance with the Contracts (Rights of Third Parties)
         Act 1999 and this Agreement may not be amended, terminated or rescinded
         in any manner adverse to the interests of the Holders without the
         consent of the Holders of 75% in principal amount of the Notes then
         outstanding.

15.      JURISDICTION

15.1     To the extent that the Company, the Subordinated Lender or any of their
         respective properties, assets or revenues may have or may hereafter
         become entitled to, or have attributed to it, any right of immunity, on
         the grounds of sovereignty or otherwise, from any legal action, suit or
         proceeding, from the giving of any relief in any such legal action,
         suit or proceeding, from set-off or counterclaim, from the competent
         jurisdiction of any court, from service of process, from attachment
         upon or prior to judgment, from attachment in aid of execution of
         judgment, or from execution of judgment, or other legal process or
         proceeding for the giving of any relief or for the enforcement of any
         judgment, in any competent jurisdiction in which proceedings may at any
         time be commenced, with respect to its obligations, liabilities or any
         other matter under or arising out of or in connection with this
         Agreement and the transactions contemplated hereby, each the Company
         and the Subordinated Lender hereby irrevocably and unconditionally
         waive, and agree not to plead or claim, any such immunity and consent
         to such relief and enforcement.



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15.2     Each of the parties hereto irrevocably agrees that any suit, action or
         proceeding arising out of or based upon this Agreement shall be
         instituted in the courts of England and Wales; and irrevocably waives,
         to the fullest extent it may effectively do so, any objection which it
         may now or hereafter have to the laying of venue of any such
         proceeding; and irrevocably submits to the jurisdiction of the courts
         of England and Wales in any such suit, action or proceeding. However,
         the Trustee shall not be prevented from bringing proceedings in any
         other courts with jurisdiction. To the extent allowed by law, the
         Trustee may bring concurrent proceedings in any number of
         jurisdictions. The Company and the Subordinated Lender have each
         appointed Twyford Bathrooms as their respective authorised agent (the
         "UK AUTHORISED AGENT") upon whom process may be served in any such
         suit, action or proceeding arising out of or based upon this Agreement,
         which may be instituted in a court located in London, England (the "UK
         APPOINTMENT LETTER AGREEMENT"). The Company and the Subordinated Lender
         each expressly consent to the jurisdiction of the courts of England and
         Wales in respect of any such action and waive any other requirements of
         or objections to personal jurisdiction with respect thereto. Such
         appointment shall be irrevocable unless and until replaced by an agent
         reasonably acceptable to the Trustee. The Company and the Subordinated
         Lender each represent and warrant that the UK Authorised Agent has
         agreed to act as said agent for service of process, and the Company and
         the Subordinated Lender each agree to take any and all action,
         including the filing of any and all documents and instruments, that may
         be necessary to continue such appointment in full force and effect as
         aforesaid. Service of process upon the UK Authorised Agent and written
         notice of such service to the Company or the Subordinated Lender, as
         the case may be, shall be deemed, in every respect, effective service
         of process. If the appointment of the UK Authorised Agent ceases to be
         effective in respect of either the Company and/or the Subordinated
         Lender (whether as a result of a breach of the terms of this clause
         15.2 or otherwise), the Company and/or the Subordinated Lender, as the
         case may be, shall immediately appoint a further person in England
         reasonably acceptable to the Trustee to accept service of process on
         its behalf in England and, failing any such appointment within 15 days,
         the Trustee shall be entitled to appoint such a person by notice to the
         Company and/or the Subordinated Lender, as the case may be. Nothing
         contained herein shall affect the right to serve process in any other
         manner permitted by law.

16.      FURTHER ASSURANCE

         Each of the Company and the Subordinated Lender shall do all acts and
         things (including, without limitation, the execution of powers of
         attorney, assignments or other instruments) as are required to give
         effect to the purposes of this Agreement.



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                            (SIGNATURE PAGE FOLLOWS.)




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THIS AGREEMENT has been executed by the parties the day and year first above
written.

POOL ACQUISITION S.A.

By:      _____________________________
         Name:
         Title:

Address: 19-21 boulevard Prince Henri
         L-1724 Luxembourg
         RC Luxembourg 13 82 054

Fax:

Attention:        Dr. Manuel Frias



SANITEC INTERNATIONAL S.A.

By:      _____________________________
         Name:
         Title:

Address: 19-21 boulevard Prince Henri
         L-1724 Luxembourg
         RC Luxembourg 13 82 054

Fax:

Attention:        Dr. Rainer S. Simon



THE BANK OF NEW YORK, in its capacity as Trustee under the Indenture

By:      _____________________________
         Name:
         Title:

Address: One Canada Square
         London E14 5AL England

         Fax:     +44 (0) 207 964 6399

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Attention:        Corporate Trust Administration









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