By  on July 28, 2009

MILAN — After six months of negotiations, it appears a Safilo sale isn’t in the cards for now.

The troubled Italian eyewear maker acknowledged Monday that “negotiations with leading international private equity funds aimed at a recapitalization” of the company “have been terminated as the interested parties have formally withdrawn from negotiations without presenting any offers.”

Safilo Group SpA, which has licenses with Giorgio Armani, Dior, Gucci and Valentino, among others, has been in talks with private equity funds Bain Capital and PAI Partners, according to sources. Safilo has never officially confirmed the names of potential bidders, as other funds such as CVC Capital Partners and Apax Partners have also been linked to the eyewear firm. Nicolas Berggruen, the owner of Berggruen Holdings, which controls North American eyewear manufacturer FGX International Holdings Ltd., also submitted a merger proposal earlier this month.

Safilo’s statement Monday came as a surprise given that only three weeks ago sources said the talks were intensifying and that a deal was likely to be struck by the end of the month.

First reports on Safilo’s search for a white knight emerged in January, following Roberto Vedovotto’s return to the firm as chief executive officer in November to work on a turnaround plan. Sources say more than 30 percent of the company is on the table in order to strengthen Safilo’s capital structure as declining demand and hefty debts weigh on the firm’s balance sheet. The Tabacchi family controls 39.9 percent of Safilo via Only 3T SpA.

Safilo’s board met on Monday to approve 2009 first-half financial results, but decided to adjourn the meeting until August 4, “in order to evaluate in detail the current situation and identify potential actions to be put in place to guarantee a sustainable capital structure going forward,” according to the company.

As of March 31, Safilo’s net debts totaled 617.7 million euros, or $861.7 million. First-quarter net profits fell 87 percent to 1.7 million euros, or $2.2 million, after sales dropped 11.7 percent. According to analysts, the company needs a cash injection of at least 250 million euros, or $348.8 million. Dollar figures were converted at average exchange rates for the periods to which they refer.

The company has been forced to downsize some production facilities in Italy and Slovenia, as well as lay off more than 1,000 workers. In June, the manufacturer’s lending banks agreed to postpone until the end of the year a loan payment due June 30 and waive the respective debt covenants.

Safilo’s shares on Monday closed down 6.27 percent to 0.426 euros, or 60 cents at current exchange, on the Milan Bourse.

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