By  on January 5, 2009

MILAN — IT Holding SpA said Friday it would explore alternatives to improve its financial situation, after deciding not to extend its exclusive terms with Mensun Ltd., which had expired on Wednesday.

The Italian fashion group said it would continue “to define a possible deal” with Mensun, but that IT Holding’s board also had mandated new chief executive officer Pierantonio Nebuloni “to evaluate other possible actions.”

Last month, IT Holding, which owns the Gianfranco Ferré, Malo and Exte brands, and operates under license the Just Cavalli, Costume National C’N’C and Galliano labels, said it had reached a nonbinding agreement with Mensun regarding “a possible disposal of assets.” At the time, IT Holding did not disclose what assets it would sell to Mensun, which is represented by Chinese businessman Billy Ngok, although they are thought to include Ittierre SpA, its apparel manufacturing unit. In September, IT Holding said negotiations involved the sale of a minority stake in PA Investments SA, its parent company, and possible commercial and production agreements in the Asian market.

IT Holding is under intense pressure due to the size of its debt and a string of poor results. In November, the group forecast an 8 percent drop in full-year revenues and a lower profit margin, after a net loss of 10.1 million euros, or $15.4 million, in the first nine months of the year, compared with earnings of 6.6 million euros, or $8.9 million, in the same period in 2007. Revenues through Sept. 30 fell 7 percent to 468 million euros, or $712.5 million, while earnings before interest, taxes and depreciation dropped 16 percent to 83.2 million euros, or $126.7 million. Dollar figures were converted at average exchange rates for the periods to which they refer.

As of Sept. 30, following a reduction in working capital, IT Holding’s debt was 295.4 million euros, or $413 million, including a 185 million euro, or $258.6 million, bond that expires in 2012. PA is laden with debt of about around 140 million euros, or $175.6 million.

Last week, credit ratings agencies Moody’s Investors Service and Standard & Poor’s downgraded IT Holding for the second time in as many months, after the fashion company asked lender Intesa Sanpaolo SpA to postpone for a second time a 9.4 million euro, or $13.1 million, payment on a loan due Dec. 22 to April 18.

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