MILAN — Prada has found some fresh funding and it’s made in Italy.

Prada said it has reached a preliminary agreement with a pool of Italian banks to provide “long-term financial support” for its development strategy. Prada declined to quantify the size of the financing, but daily paper MF reported Friday it is for $498.7 million, or 425 million euros converted at current exchange.

This story first appeared in the November 17, 2003 issue of WWD. Subscribe Today.

The banking group — which comprises Banca Intesa, Unicredito, Centrobanca and Banca Popolare di Lodi — will replace a syndicate of other banks that guarantee some of Prada’s indebtedness. Those institutions are Deutsche Bank, Barclays and BNP Paribas. As reported, Prada was renegotiating its financing terms with these banks amid challenging market conditions that negatively affected the company’s results.

Prada did not provide further details regarding the agreement with the banks, adding that “discussions are continuing.”

“After 10 years of exceptional development and the slowdown in 2002 and 2003, we have reached all the necessary conditions — organizational, industrial and financial — to move ahead on the path of sustained growth, starting in 2004,” chief executive Patrizio Bertelli said in a statement.

Prada said it’s reorganizing on both an industrial and commercial front and those efforts are starting to pay off. The company cited “strong revenue growth and net improvement in profitability” in the third quarter of this year and the positive trend accelerated in the first half of the fourth quarter.

Prada has yet to release financial figures so far this year. Weekly magazine Il Mondo reported recently that Prada’s earnings before interest and taxes for the six months ended June 30 fell 51.1 percent to $21.7 million, or 18.5 million euros, while sales shed 16.9 percent to $732.6 million, or 632.9 million euros. The company declined to verify those numbers.

Friday, Prada reiterated full-year forecasts made by Bertelli last week. The company said 2003 net profit should rise 48 percent to $58.7 million, or 50 million euros, from $31.7 million, or 27 million euros, while sales should be in line with the 2002 figure of $1.76 billion, or 1.5 billion euros, excluding the effects of currency fluctuation.

Prada is working to chip away at the debt pile it amassed from a buying spree to build a portfolio of brands that includes Jil Sander, Helmut Lang, Genny and Car Shoe. After thrice postponing its plans for an initial public offering to reduce its debt, Prada has been forced to explore other methods of financing.

Prada has $821.3 million, or 700 million euros, worth of convertible bonds that expire in 2005. They must be paid back if Prada hasn’t listed on the stock exchange by then.

Last week, Prada finalized a deal to sell 55 percent of the British footwear firm, Church’s, to Swiss Equinox Investment. Prada said the sale will help it lower its net debt to around $762.7 million, or 650 million euros, by yearend. That figure stood at $1.11 billion, or 950 million euros, at the end of 2002. Prada added it will substantially cut its debt through a real estate spin-off in the coming months.

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