MILAN — Florence and Milan-based Italian union groups are shining the spotlight on the future of the Roberto Cavalli brand and its employees.
On Tuesday, Filctem Cgil and Femca Cisl lamented the fact that almost three months after the deadline set by a Milan judge to approve the so-called process of “composition with creditors,” a ruling has not yet been issued to approve the restructuring plan presented by the company.
The unions emphasized growing “worries and uncertainties over the future of the employees” of Cavalli in Milan and Florence. The approval of the court, in fact, is the necessary condition for the definitive acquisition of the company by Damac and, therefore, “to really understand the true intentions of the new owner. It is incomprehensible and therefore unacceptable that until today it has not been possible to have clarity on the company’s prospects and the fate of the 200 Cavalli employees,” said the unions in a joint statement.
The unions believe the situation is no longer “sustainable” and that, “unless there is an immediate unlocking of the situation,” they will ask for an institutional table “to avoid putting the company’s continuity and the future of the 200 families at risk.”
“We are within the timing foreseen by the procedure and we are expecting a response shortly,” said Cavalli’s chief executive officer Gian Giacomo Ferraris. “Accordingly, I don’t believe there are reasons to worry regarding the outcome of the procedure. The management is aware that, in this situation, every day is important to ensure the future of the company. We are ready to get down to work as soon as we receive the approval.”
A market source attributed the delay to “an overworked judge that has a few more complicated issues to smooth out before turning to Cavalli, which is a deal that is basically done.”
As reported, the official closing of the Roberto Cavalli sale was expected by the end of October, according to sources.
This summer, Vision Investment Co. LLC, controlled by Hussain Sajwani, founder and chairman of the Damac Properties Group, signed a binding contract with the Florence-based fashion company and its shareholder Varenne 3 to acquire 100 percent of the firm. This confirmed a WWD report on June 28 that the judge expected to rule on the sale had approved the offer made by Damac. Sources contend Ferraris was instrumental in the deal with Sajwani and that he is expected to stay on in his role.
The binding agreement is in compliance with Cavalli’s “composition with creditors” with the Court of Milan and it allows the business to continue while it holds discussions with creditors and implements a debt restructuring plan. Financial details and the amount of the debt were not disclosed, although sources peg the transaction at around 160 million euros and believe the agreement includes a capital increase of around 65 million euros and the payment of all creditors.
The deadline for creditors to oppose the restructuring of Cavalli’s debt was Sept. 30, but, according to sources, nobody has contested the plan so far.
The buyer has presented an industrial plan, which is being evaluated by a judge of the Court of Milan who was expected to rule on Cavalli’s agreement with creditors that was submitted on Aug. 2, a source said. Only after the judge’s approval will the transfer of shares to the new owner be completed.
A property developer, Damac is based in Dubai and it was especially interested in Cavalli because its strategic investment arm Dico International is working on a five-star hotel tower in Dubai that is expected to comprise 220 rooms and to be completed in 2023. When the deal was revealed, Ferraris said this was the first of at least five hotels, called Aykon, to open in 10 years and to be decorated by Cavalli. Damac, which is one of the top 10 companies publicly listed on the Dubai Financial Market with a market capitalization of $4 billion, is funding the project with an investment of $500 million. Damac is also building Just Cavalli villas in Dubai.
Italian private equity fund Clessidra Sgr took control of Cavalli in 2015 through its Varenne vehicle, which at the time included L-GAM and Chow Tai Fook Enterprises Ltd.