Italy-based Safilo Group SpA, maker of Gucci and Dior eyewear, said its board approved a recapitalization plan under which Dutch shareholder HAL Holding NV would end up owning as much as half the company.
HAL will inject new funds of about €283 million (about $423 million), which Safilo will use to strengthen its capital structure and partially repay about €185 million of debt. HAL, which holds 2% of Safilo, will increase its stake to between 37.23% and 49.99%, Safilo said late Monday.
HAL will buy €195 million of outstanding high-yield 2013 notes issued by Safilo Capital International. The recapitalization is conditional on the successful completion of HAL’s cash tender offer on the notes, which needs to reach an acceptance threshold of at least 60%. Failure to reach that threshold would trigger a series of new steps, including a rights issue for a total amount of €250 million.
Safilo also agreed on the restructuring of its senior debt facilities, through an arrangement with its main financing banks, Intesa Sanpaolo SpA and Unicredit SpA. The company’s €300 million senior debt facilities with those banks will be extended to June 30, 2015 from Dec. 31, 2012.
The eyewear maker also agreed to sell HAL some of its noncore retail chains, such as Loop Vision in Spain, Just Spectacles in Australia and its retail activities in China. In addition, it will sell HAL its Sunglass Island and Island Optical shop chains in Mexico. The move would free up Safilo to concentrate on production and licenses while HAL handles distribution.
Safilo also reported weak third-quarter earnings, citing challenging and uncertain market conditions. The company’s revenue for the three months ended Sept. 30 declined 7% to €213 million from €229 million in the year-earlier period. Earnings before interest, taxes, depreciation and amortization fell to €3.5 million from €16.7 million.