Prada: IPO Delayed Until at Least 2003

By Luisa Zargani<br><br>MILAN — With all the uncertainty shrouding global stock markets, there is at least one thing for sure: there will be no Prada IPO this year.<br><br>After three postponements, chairman and chief executive officer Patrizio...

By Luisa Zargani

This story first appeared in the July 24, 2002 issue of WWD.  Subscribe Today.

MILAN — With all the uncertainty shrouding global stock markets, there is at least one thing for sure: there will be no Prada IPO this year.

After three postponements, chairman and chief executive officer Patrizio Bertelli gave that definitive word on the initial public offering for his company on Monday.

“Depending on market conditions, we will go public in 2003 or 2004,” he said.

Last week, Bertelli said he had “no regrets” about postponing the company’s public listing at the end of June.

“We don’t think this is the right moment,” said Prada chief financial officer Riccardo Stilli in a phone interview Monday evening. “Each day, we see big companies falsifying balance sheets and luxury goods’ stocks taking the plunge. The market is too unstable now.

“We believed in listing the company this year — until June 26,” added Stilli. “Even that morning, we were preparing the slides and the information for the road show.”

Stilli said Monday that even a month later, there is still too much uncertainty to feel safe.

“We don’t have a crystal ball. There could be a quick and sudden turnaround in the markets, but there is a whole machine to be set in motion again and there are only five months until the end of the year,” said Stilli, citing administrative and legal updates and business follow-ups, plus resubmitting formal requests to the Italian Bourse and Consob, Italy’s equivalent of the American Securities and Exchange Commission.

Stilli firmly denied that Bertelli’s involvement with the America’s Cup race and his departure for New Zealand at the end of September had anything to do with the timing of the listing.

Stilli said Prada’s board members will postpone the listing as long as there are “market uncertainties and instability.”

Luxury goods analysts weren’t exactly surprised by the decision.

“The general feeling is that the market will not pick up in the second half of this year, so it certainly seems to be the right decision that Bertelli would postpone the IPO until 2003 and not risk a quotation this year,” said Carlo Pambianco, president of the eponymous consultancy here.

Chiara Tirloni, an analyst with UBS Warburg, said economic conditions have not changed or improved since Prada cancelled the offering.

“Given that they put it off before and given the recent news flow from the sector, it doesn’t stun me,” said Tirloni. “I don’t think Prada’s situation has been helped by the macroeconomic conditions.”

Stilli recently said Prada was banking on an IPO by June 2005 — when the company’s $694.4 million worth of convertible bonds mature and must be paid back if the company doesn’t go public. If there is an IPO, those bonds can be converted into shares.

“I think the debt is sustainable,” said Tirloni. “I think Prada will find the money somehow, either by selling off some of its real estate or by getting the banks to loan them some more money.”

The Prada cancellation comes at an obviously turbulent time for most markets around the world. It was sharing headlines with another high-end fashion IPO, Burberry, which went public on the London Stock Exchange on July 12 at $3.50 a share, after being priced the night before at $3.45. Analysts said that going ahead with the listing was a gutsy move, considering the shaky market.

On Monday, Burberry shares dropped 11 cents, or 3 percent, to close at $3.54 on the London Stock Exchange.

— With contributions from Courtney Colavita and Amanda Kaiser”