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Prada Gets $455M Loan

Prada SpA's loan will be used to refinance a long-standing debt and to propel retail growth.

Patrizio Bertelli

MILAN — Prada SpA has negotiated a three-year loan agreement of 360 million euros, or $454.8 million at current exchange, which will be used to refinance a long-standing debt and to propel the company’s retail growth, its top priority.

This story first appeared in the July 13, 2010 issue of WWD.  Subscribe Today.

Prada is eyeing an initial public offering for the fourth time, possibly as soon as the first quarter of 2012. The timing coincides with the expiration of a 450 million euro, or $568.5 million, debt, which will partly be written off by this fresh loan, secured at lower interest rates.

The brand’s goal is to generate more than 70 percent of consolidated turnover from directly operated stores next year. The brand has 280 units in 76 countries.

The new loan is a move that will help both the banks and Prada, said Armando Branchini, vice president of Milan-based consulting firm Intercorporate.

“Prada is currently undergoing a very positive sales growth, and I believe that by 2013 the return of the company’s retail investment will outdo this loan, especially with today’s cost of money,” he said. “Having more sales points will also make Prada more palatable for the IPO.”

Prada spokesman Stefano Cantino said it was premature to say how the loan would be divided.

Regarding store openings in the pipeline for this year, there are 30 new ones planned, with a focus on Asia-Pacific. “We are also strengthening our presence in Europe with openings in Frankfurt, Prague, Berlin and Lisbon,” Cantino said.

Prada SpA reported operating profit in the first quarter ended April 30 rose almost sixfold, given a boost by strong retail sales in the U.S. and the Far East. Earnings before interest, taxes, depreciation and amortization increased to 64 million euros, or $86.4 million.

The banks that granted the loan are: Banca IMI-Intesa Sanpaolo (also global coordinator of the operation), UniCredit Corporate Banking, Crédit Agricole Corporate and Investment Bank, Mizuho Corporate Bank, HSBC Bank, Monte dei Paschi di Siena and Natixis.

A spokesman said the company, which controls the Prada, Miu Miu, Car Shoe and Church’s brands, is valued at 3 billion euros to 4 billion euros, or $3.7 billion to $4.95 billion, a valuation that could further increase in the next 18 months.

Amsterdam-based Prada Holding, through which chief executive officer Patrizio Bertelli and designer Miuccia Prada control about 95 percent of Prada SpA, has debts totaling 650 million euros, or $927.1 million. Intesa Sanpaolo controls the rest of the company.

The debt piled up during the firm’s spending spree in the Nineties when it expanded through the acquisition of brands such as Jil Sander, Helmut Lang and a stake in Fendi.

In related news, Prada on Monday refuted a report in China’s Economic Observer that said Chinese magnate Lu Qiang had acquired a 13 percent stake in the group over the past two years.

“Prada denies such a rumor, which has no ground whatsoever,” the company said.