By  on January 8, 2010

MILAN — The possibility of bankruptcy is looming over Mariella Burani Fashion Group following the resignation of its financial adviser, which failed to renegotiate the group’s debts of 492.6 million euros, or $679.7 million at current exchange, as of the end of November.

The group’s financial adviser, Mediobanca Banca di Credito Finanziario SpA, has failed to renegotiate MBFG’s debt with more than 40 banks, and quit at the beginning of the year, as revealed by MBFG this week. Creditors include Deutsche Bank, Bank of China, Cariprato and Barclays Bank plc.

On Dec. 30, the Italian apparel manufacturer stated it was negotiating with Lebanese investment bank Gulf Finance & Investment Corp. to create an escrow account of 50 million euros, or $69.5 million, to be employed as a capital increase, and the Burani family also has voiced the intention of finding additional funding, but guarantees have yet to be provided. In September, the group said it was seeking additional funds of 83.5 million euros, or $122.1 million, needed to cover losses in the first half.

Italy’s stock market watchdog, Consob, has been checking on possible irregularities connected to trading in MBFG’s shares, which were suspended on the Milan Bourse in September. In addition, the Guardia di Finanza, or Finance Guard, an Italian police force under the authority of the Minister of Economy and Finance, has been searching the group’s offices in Milan.

MBFG produces the Mariella Burani fashion line; holds licenses with Vivienne Westwood for the designer’s Anglomania collection, John Galliano for jewelry and Aquascutum for footwear, and its holdings include the Mandarina Duck brand, among others. Mandarina Duck, together with other leather goods accessories labels including Braccialini, Baldinini, Coccinelle and Francesco Biasia, is part of Antichi Pellettieri SpA, controlled by the group, and widely considered to be one of its most successful and desirable assets.

“We can’t be at ease, but we have faith that there is no interest or desire to see these brands fail,” said Riccardo Braccialini, president of Braccialini, adding that Antichi Pellettieri is “healthy” and that 2009 sales at the Tuscan firm founded by his family were in line with those of 2008, reaching 65 million euros, or $90.3 million. “We are very pleased with these results,” said Braccialini.

In July, Giambattista Valli signed a five-year licensing agreement with MBFG for the production and distribution of his namesake line, starting with the fall collection. The designer could not be reached for comment. In March, MBFG also inked a deal with La Perla for the production and distribution of its ready-to-wear line.

The group sold its stakes in jewelers Calgaro Srl and Rosato Srl in early 2009 to focus on apparel and leather goods, which together account for more than 90 percent of its turnover.

At the end of November, the group’s debt amounted to 492.6 million euros, or $679.7 million, compared with 488.9 million euros, or $674.6 million, at the end of October and 478.4 million euros, or $636.2 million, at the end of June. Dollar figures were converted at average exchange rates for the periods to which they refer. Sources here say the difficult economy bit into the group’s performance, and also the Burani family expanded its holding over the past decade too quickly and relied too much on bank financing.

MBFG posted net losses of 142.1 million euros, or $188.9 million, in the first six months of 2009, compared with net profits of 3.9 million euros, or $5.9 million, in the same period last year. The company attributed the drop to an “impairment test,” or devaluation of assets, for a total value of 72.5 million euros, or $96.4 million. Sales fell 24 percent to 246.1 million euros, or $327.3 million, in the first half compared with the same period last year.

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