MILAN — Versace did it last week and now it’s Prada’s turn to take care of a nagging bond issue.
A Prada spokesman confirmed Friday that its pool of Italian banks — Banca Intesa, Unicredito Italiano, Banca Popolare di Lodi and Centrobanca —have increased their guarantee of Prada’s indebtedness to cover all of the $847.7 million, or 700 million euros, worth of convertible bonds Prada has due in 2005.
Under the terms of an original deal stipulated in November, this same pool of banks had guaranteed $514.7 million, or 425 million euros, worth of Prada’s debt.
Along with this increased financial support comes increased collateral. As part of the new 15-month agreement, Prada pledged 60 percent of its capital, up from the 40 percent originally stipulated. A Prada spokesman stressed the Prada family and chief executive Patrizio Bertelli will retain 100 percent voting rights during that period.
“This debt-reduction program will give Prada the opportunity to evaluate a public listing before 2005,” said the spokesman. “If the financial markets are not favorable for an IPO, Prada will still be in a good position to refinance its debt.”
Prada has sought to reduce the debt it has amassed from buying labels such as Jil Sander and Helmut Lang. At the end of 2001, Prada’s debt stood at $1.29 billion, or 1.07 billion euros. By the end of 2003, that figure dropped to $817.4 million, or 675 million euros. The company said it plans to cut even more debt this year, with a target for 2004 of $351.2 million, or 290 million euros.
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