MILAN — The writing appears to be on the wall for IT Holding SpA.
After the group warned it could follow its production and licensing subsidiary Ittierre SpA into administration, IT Holding SpA, which owns the Gianfranco Ferré, Malo and Extè brands, has sent out a dossier to potential investors, hoping to solicit bids for part or all of the group, WWD has learned.
Sources said Wednesday that IT Holding chairman and majority stakeholder Tonino Perna had been marginalized due to the Italian fashion group’s inability to service its debts and was ready to throw in the towel, and that the banks were looking to recoup their funds as soon as possible.
A European fund is already eyeing knitwear label Malo, sources said. Meanwhile, a Qatari investor has reportedly expressed interest in Ferré, IT Holding’s marquee label.
“We are evaluating different acquisitions, with minority or even majority stakes,” Ashraf Abu Issa, president and chief executive officer of Doha, Qatar-based Abu Issa Holding, was quoted as saying in Wednesday’s edition of Italian financial daily Il Sole 24 Ore. “There are brands in Italy, which are interested in opening their capital, and then companies in difficulty, which are in urgent need of a partner. Ferré could interest us, too.”
Abu Issa Holding controls luxury distribution chain Blue Salon in Qatar.
A spokesman for IT Holding declined to comment.
IT Holding acquired Malo in 1999 for $55 million and Ferré in 2002 for between $150 million and $175 million. The group, whose shares have been suspended from the Milan Bourse, had a market capitalization of 43.3 million euros, or $56 million, at the last count.
IT Holding said Monday it had decided to place Ittierre, which operates under license the Just Cavalli, VJC Versace, Versace Sport, C’N’C Costume National and Galliano labels, into administration to allow the group to be restructured and to continue its business operations. Ittierre accounted for 65 percent of IT Holding’s turnover in 2008 and 77 percent of earnings before interest, taxes, depreciation and amortization, according to investment bank Mediobanca. The business is also the most profitable part of the fashion group.
IT Holding, which employs around 1,800 people, also warned it could follow Ittierre into administration as Monday’s decision triggered a clause allowing bondholders to call for immediate repayment of a 185 million euro, or $239.1 million, bond, due 2012. Moody’s Investors services downgraded IT Holding’s Probability of Default rating on the senior notes to D, following the announcement.
Dollar figures are converted at average exchange rates for the periods to which they refer.
Italy’s government is expected to appoint a trio of administrators for Ittierre today. Industry Minister Claudio Scajola added: “[It is] a measure to relaunch an important brand in a sector, like fashion, which is considered a driving force for the country.”
IT Holding has been struggling to service net debts, which, as of Sept. 30, totaled 295.4 million euros, or $381.9 million, including the bond, due to soft consumer spending and difficulties in obtaining further support from banks. IT Holding said last week a delay in royalty payments had created tensions with licensors, and the firm missed an extension on a loan payment in December that was originally due in October, both of which precipitated Ittierre’s bankruptcy.
The existence of a dossier would suggest talks with an international fund, believed to be London-based private equity firm Kingsbridge Capital Ltd., and with Chinese businessman Billy Ngok’s Mensun Ltd., have reached an impasse.
IT Holding said last week it was exploring the feasibility of a proposal, which envisaged a capital increase and the purchase of the bond, and Italian media speculated restructuring and finance specialist Kingsbridge, which is part of Austrian investment company Hardt Group, was negotiating a 100 million euro, or $129.3 million, investment.
In December, IT Holding said it had reached a nonbinding agreement with Mensun regarding a possible disposal of assets, thought to include Ittierre. In September, IT Holding said negotiations involved the sale of a minority stake in PA Investments SA, its parent company, and possible production and commercial agreements in Asia.
Perna controls 60.6 percent of IT Holding via PA Investments and a further 1 percent through GTP Holding SpA, a separate holding vehicle for PA. PA has debts of around 140 million euros, or $181 million.
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