The Financial Times reports that Safilo, the Italian luxury eyewear maker, is close to agreeing a deal that would see a new investor acquire a substantial stake to help reduce its hefty debts after receiving offers from two private equity firms in
Bain Capital and PAI Partners have made offers for about 30 percent of Safilo, which has net debt of about €618m ($866m).
The potential deal might also include an option to acquire a majority holding at a later date, said one person close to the talks.
The board of the Padua-based company is expected to meet in the coming days to choose a partner in a transaction likely to result in a significant restructuring of the company’s operations.
People familiar with the situation said the outcome could hinge on which offer had the greater appeal for the Tabacchi family, which controls Safilo and owns a stake of about 40 per cent.
Shares in Safilo fell 7.8 per cent to €0.498 in Milan on Friday, giving it a market capitalisation of €142m.
Safilo, which makes a range of eyewear for some of the world’s top fashion houses, has suffered from a series of downgrades to its credit rating in the past few weeks.
Fitch Ratings warned last month that “the company faces a likely breach of its financial covenants” at the end of the second quarter of this year unless it could reach a debt rescheduling agreement with its creditors.
Safilo’s net profits fell to €1.7m in the first three months of this year, down 87 per cent from the first three months of 2008.
It has been forced to shut some of its manufacturing operations in Italy and lay off employees as the global recession bites into its operations.
The imminent Safilo investment is the latest in an increasing round of private equity deals in Italy.
Last week, two private equity firms – 21 Partners, founded by Alessandro Benetton of the fashion group, and Sirius Holding – launched a buy-out offer for RGI Group, which produces computer software mainly for the insurance industry.
Sirius Holding is controlled by Paolo Benini, the founder of RGI. The two firms have teamed up to offer €2.01 for each RGI share, which closed 2 per cent higher at €2 on the Milan stock market on Friday.
The transaction is likely to be worth about €47m.
Bankers and private equity executives in Milan said one reason for the spike in activity in Italy – and the likelihood that more would follow – was because of the country’s high number of family-controlled companies.
Some are searching for new capital to pay down debt, while others are facing generational issues that may be resolved through the entry of outside investors.
Meanwhile, Italy’s fashion industry was on the brink of another private equity deal after the designer Roberto Cavalli signed a letter of intent this month to sell a 30 per cent stake to Italy’s Clessidra Capital Partners, the Milan-based buy-out house.