MILAN — Patrizio Bertelli may be poring over his family’s finances, but it would appear the chief executive officer of Prada has no plans to sell a minority stake in the Italian fashion group — at least as long as key lenders Intesa Sanpaolo and Unicredit remain committed to funding the company.
“We have received various offers from potential investors interested in taking a stake in the company, but there are no talks under way to that end,” a Prada spokesman told WWD on Thursday.
Bertelli is negotiating with lenders the term payment of his company’s debts, while private equity firms are trying to tempt him with alternative options to fund further retail expansion. Carlyle, TPG, Investindustrial and Clessidra reportedly are among suitors to have come knocking on Prada’s door in the last six months with offers to buy up to 40 percent of its capital.
Amsterdam-based Prada Holding BV, through which Bertelli and wife and designer Miuccia Prada control 95 percent of fashion group Prada SpA, owes 650 million euros, or $913.5 million, according to sources. Of this sum, a tranche payment of 100 million euros, or $140.5 million, is due in July, while a further 350 million euros, or $491.9 million, matures in July 2010 — an agreement that assumed a prior listing on the Milan Bourse, sources said. The other lenders are Calyon, Banca Leonardo, Banco Popolare and Centrobanca.
Dollar figures were converted at average exchange rates for the periods to which they refer.
Separately, Prada SpA, which operates the Prada, Miu Miu, Car Shoe and Church’s brands, closed fiscal 2008 with net debts of 537.4 million euros, or $784.6 million — although, with earnings before interest, taxes, depreciation and amortization of 282.2 million euros, or $412 million, that debt is manageable and serviced by cash flow.
With Prada’s initial public offering off the agenda for now due to market conditions — the firm over the last eight years has canceled plans for a flotation four times for that reason — selling a minority stake to a private equity firm would alleviate the holding company’s debts and free Bertelli to press on with expansion. After opening 34 stores last year, Prada plans to continue at a similar pace in the next three years, with the aim of generating more than 70 percent of consolidated turnover from directly operated stores by 2011, from around 53 percent currently, a company spokesman said. At the close of 2008, Prada’s directly operated store network totaled 238 boutiques worldwide.
However, sources said Prada’s reluctance to sell a stake to a private equity player was a no-brainer given that earnings multiples are so low — Prada’s luxury peers are trading on average on an enterprise value-EBITDA multiple of 9 from a high of 13 in mid-2007. Plus, there appears to be no need to do so since Intesa Sanpaolo, which holds the remaining 5 percent stake in the fashion group, and Unicredit were prepared to bankroll the fashion group until it eventually lists its shares in the next 18 to 24 months.
“The view inside the company is that the market will recover in 2010,” sources said.
And Prada is clearly building the management team for an eventual listing. On Thursday, the company promoted Sebastian Suhl to group chief operating officer, replacing Brian Blake, who quit in April for personal reasons after 18 months in the role.
Suhl, 41, joined Prada in 2001 as general manager of Prada France, rising to ceo of Prada Asia Pacific in 2005. He will take office on Sept. 1, reporting directly to Bertelli, and head the retail, wholesale, e-commerce and marketing departments for the Prada, Miu Miu and Car Shoe brands.
“During his time at Prada, Sebastian Suhl has shown not only in-depth knowledge of the markets, but also the capacity to expand and increase business dynamically and effectively,” Bertelli stated.
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
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Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
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