MILAN — As if any further reminder were needed of the financial crisis’ growing toll on the industry, Milan Fashion Week kicked into full swing with news that IT Holding SpA had filed for the Italian equivalent of Chapter 11.
This story first appeared in the February 27, 2009 issue of WWD. Subscribe Today.
The owner of the Gianfranco Ferré, Malo and Extè labels followed its production and licensing unit Ittierre SpA into administration on Thursday after last week filing for bankruptcy protection under the Italian equivalent of Chapter 11. Italy’s Minister of Economic Development Claudio Scajola approved the request, widening the brief of the three administrators he appointed Feb. 12 to restructure Ittierre.
The move by IT Holding is likely to set off a scramble by companies eager to snap up its brands — particularly Ferré, which shows today, and Malo, which is holding off-calendar presentations by appointment.
A spokesman for IT Holding said Thursday it was too early to say what the administrators planned to do to ease the group’s net debts, which, as of Sept. 30, totaled 295.4 million euros, or $376.7 million.
But according to sources, a dossier has been sent out to potential investors hoping to solicit bids for part or all of the group. A European fund is already eyeing knitwear label Malo, while Change Capital Partners has renewed its interest in Ferré, IT Holding’s marquee label, sources said. Meanwhile Doha, Qatar-based fund Abu Issa Holding told an Italian newspaper earlier this month it too could be interested in Ferré — meaning by next season, at least two of Italy’s high profile fashion labels could have new owners.
IT Holding submitted its petition under the Marzano Law, which allows companies to be placed under emergency administration and reorganized to stay in business.
“The extension…is designed to protect the group and continue its activities,” Scajola said of his decision. “With over 1,800 employees, [IT Holding] possesses a know-how, which needs to be preserved and developed in a way that allows the further development of an activity in a sector, which is fundamental for Made in Italy and for our country’s in world markets.”
On Wednesday, Ittierre said it obtained a 30 million euro, or $38.3 million at current exchange, line of credit from five Italian banks, after filing for protection under the same law earlier this month. The company said the lifeline would allow it to “reactivate its industrial and commercial activities in the spirit of safeguarding its day-to-day operations.”
Sources close to the Italian fashion group said the new bank facility and Thursday’s decision represented a new dawn for Ittierre with IT Holding chairman and majority shareholder Tonino Perna frozen out.
“In this financial environment, Ittierre achieved new financing in record timing. With the old ownership completely out of the picture and new money, the company is back on its feet,” sources said.
Perna holds 60.6 percent of IT Holding via PA Investments SA and a further 1 percent through GTP Holding SpA, a separate vehicle. PA has debts of around 140 million euros, or $179.4 million.
Ittierre, which employs 772 people and accounts for around two-thirds of IT Holding’s revenues, operates under license the Just Cavalli, VJC Versace, Versace Sport, C’N’C Costume National and Galliano labels, although the business ground to a standstill earlier this month after running out of cash. It still owes licensors royalties.
Roberto Cavalli, whose Just Cavalli label is Ittierre’s biggest license, generating annual revenues in 2007 of around 240 million euros, or $329 million, canceled the young line’s runway show this week, blaming the disruption at Ittierre.
“It was a very difficult decision…but the collection wasn’t up to standard, it wasn’t ready and it wasn’t complete,” Cavalli said Thursday at a presentation of 20 outfits at Just Cavalli’s showroom.
Cavalli said Ittierre still owed him 20 million euros, or $25.6 million, in royalties and that relations with the company’s management had broken down, citing a delay in deliveries. He also said this season’s sales campaign was a month behind schedule, leading to a loss of market share.
“This brand has achieved a value that needs a greater degree of care, particularly at the moment.…I would like to take my baby back home as quickly as possible and give it a lot of fatherly love,” he said.
Cavalli admitted to holding informal talks with other Italian manufacturers about replacing Ittierre, ahead of the current license’s expiry in 2010, but that for the time being he was still under contract for another two seasons.
Renzo Rosso’s production and licensing unit, Staff International SpA, is understood to be waiting in the wings.
“I won’t deny we’ve met,” Rosso told WWD. “But we have so many brands onboard and we have to give visibility to each of them. There isn’t much space, although plenty of companies are knocking at our door.”
Cavalli, who is in talks to sell up to 20 percent of his Roberto Cavalli label to private equity firm Clessidra SGR SpA, also said he was prepared to take Just Cavalli’s production in-house if necessary, saying he doubted the administrators ability to turn Ittierre around.
However, C’N’C Costume National founder Ennio Capasa told WWD he was delighted with Scajola’s appointment of lawyer Stanislao Chimenti, accountant Roberto Spada and Bain & Co. partner Andrea Ciccoli to administer Ittierre.
“Ittierre is effectively a state-owned company now, so what better guarantee?” Capasa said, adding the Marzano Law had been applied six times since being introduced in 2003, each time with a successful outcome. “[The administrators] are of the highest quality. There is a new energy. Ittierre’s resources remain and the product the company makes is not replicable.”
Capasa also said the C’N’C Costume National collection, slated to show this morning, was of the same quality as previous seasons, although he admitted deliveries had been slow.