MILAN — Fashion house Cerruti has almost broken free from its financially troubled parent, Fin.part.
Italian men’s wear manufacturer Manifattura Paoloni has signed a contract to buy 82 percent of Cerruti 1881 SAS from cash-strapped Fin.part for 112 million euros, or $136.4 million. In addition to that, it will take on about 11 million euros of debt owed by Cerruti Holding SpA, which is being liquidated.
If completed, the deal will mark the end of what has been a bumpy ride for the label under Fin.part ownership. Fin.part is currently facing the courts as it approaches bankruptcy.
Manifattura Paoloni said in a release it has put down a 5 million euro, or $6.1 million, deposit to buy Cerruti, but the rest of the acquisition hinges on whether a Milan court will allow Fin.part to continue operating and execute a restructuring plan that involves a partial reimbursement to Fin.part and Cerruti bondholders. A court date for that decision has not been set. Fin.part said last July it was defaulting on nearly $260 million worth of bonds.
If the acquisition goes through, Manifattura Paoloni will pay another 5 million euros at the deal’s closing. Then it will pay off the rest in 12 annual installments of 8.5 million euros. But Manifattura Paoloni outlined a caveat: The size of those installments will decrease, starting with the fourth installment, if other Cerruti debts emerge over time.
Fin.part bought control of Cerruti (51 percent) in 2000 for $70 million. Cerruti was one of several Fin.part acquisitions, including Frette, Maska and Moncler, that caused Fin.part to rack up hundreds of million of dollars in debt. Fin.part has since spiraled into a financial crisis that has been marked by the resignation of founder Gianluigi Facchini and the ire of Fin.part investors.
In 2001 Fin.part bought the remaining 49 percent of Cerruti from designer Nino Cerruti and his family for $67 million. Under Fin.part control, Facchini and Nino Cerruti reportedly clashed and wrangled for control of the firm. In 2001, the company tapped Roberto Menichetti to design Cerruti, but he left six months later. Istvan Francer and David Cardona also did stints at the label.
Manifattura Paoloni is hardly a household name in the U.S., as most of the company’s business is in Italy and other European countries. WWD’s sister publication, DNR, ranked the company as the eighth-biggest men’s wear manufacturer in Italy. It is based in the central Italian region called Le Marche, and it posted 2004 sales of nearly 50 million euros, or $60.9 million.