WWD reports
that Prada has received a loan extension from its lenders until 2012. Prada Holding BV, founded by Patrizio Bertelli and Miuccia Prada, will have until then to repay $641.8 million of the company's debt. The extension gives some breathing room to the company -- if the deal had not gone through, a stake in Prada would have had to been sold to a new investor.
The extension — which banks Intesa Sanpaolo, Unicredit, Calyon, Banca Leonardo, Banco Popolare and Centrobanca agreed to last week following months of talks — alleviates any pressure on the couple to sell a stake in Prada SpA to generate funds and possibly sets a deadline for the firm’s eventual flotation, sources said Monday. Prior to the new accord, 100 million euros, or $142.6 million, of the sum was due to be repaid in July, while 350 million euros, or $499.2 million, matured in July 2010.
The news confirms a report in WWD in June. Representatives of the holding company could not be reached for comment on the new debt deal on Monday.
Amsterdam-based Prada Holding, through which Bertelli and Miuccia Prada control 95 percent of Prada SpA, has debts totaling 650 million euros, or $927.1 million. Separately, Prada SpA, which operates the Prada, Miu Miu, Car Shoe and Church's brands, closed fiscal 2008 with net debts of 537.4 million euros, or $784.6 million. Earnings before interest, taxes, depreciation and amortization for the period reached 282.2 million euros, or $412 million.
Prada Holding's new loan terms effectively buy Bertelli a few years to focus investments on ongoing expansion plans for his fashion empire. These aim to generate more than 70 percent of consolidated turnover from directly operated stores by 2011, which would be a significant increase from around 53 percent currently. The new loan terms also bolster the Prada chief executive’s resolve not to sell a minority stake to third party investors ahead of an eventual listing on the Milan Bourse, which, if it does ever happen, will now likely do so before 2012. As reported in June, private equity firms including Carlyle, TPG, Investindustrial and Clessidra have been circling since Prada called off plans for an initial public offering last year for the fourth time this decade, citing market conditions.
Prada's competitors have not been so lucky. Italian eyewear maker
Safilo Group SpA may face liquidation after talks with venture capitalists failed last week, and Mariella Burani Fashion Group SpA is waiting to hear if it will get a requested extension on repaying its debt while it tries to raise capital. IT Holding SpA, the parent company of Gianfranco Ferre, Just Cavalli, VJC Versace and Versace Sport, Itierre, is now in bankruptcy proceedings. Things are tough in the Italian fashion industry.
