MILAN — Borsalino has a new investor that will allow the storied hat maker to avoid bankruptcy and further develop its business globally.
Haeres Equita Srl has entered into an agreement with Borsalino Giuseppe & Fratello SpA as a first step to rescue the company and its more than 110 employees.
In a joint interview at Borsalino’s new showroom in Milan, chief executive officer Marco Moccia and Francesco Saverio Canepa, president of the internal control committee, explained that the only path available to avoid bankruptcy was to file a petition for a composition with creditors with the court of Alessandria in which Haeres Equita will grant the repayment of creditors and will become the owner of Borsalino.
Haeres Equita is a company incorporated under Italian law, based in Valenza, near Alessandria.
Although financial details were not disclosed, the transaction is valued at around 20 million euros, or $22.3 million, corresponding to Borsalino’s debt, which includes a tax notice from Italy’s revenue service for around 15 million euros, or $16.7 million.
The main shareholder of Haeres is the Italian investor Philippe C. Camperio, who is managing partner of Haeres Capital, a Swiss private equity investment company owning and managing luxury ventures and real estate. He is also the cofounder of Quest Partners, a private equity investment banking boutique founded in 2000, and chairman of Swiss Luxury Beliefs SA, a private holding company owning and operating luxury fashion ventures founded in 2008.
“Whereas substantial work remains to be executed, we are looking forward to face the challenges and contribute to the preservation and further development of this fabulous house, created almost 160 years ago, into a global luxury brand,” said Camperio separately. “The Italian heritage and worldwide reputation of Borsalino make it one of the most emblematic label and we look forward to be part of its next 160 years future.”
The papers were deposited at the court of Alessandria, where Borsalino is headquartered, on Wednesday. “Camperio presented an industrial plan that gives continuity to the company,” Moccia said. “Continuity is a key priority. This is a good car, it’s ready to start, but it needs fuel.” Moccia has been ceo of Borsalino since January 2013, under the presidency of Raffaele Grimaldi.
Canepa described Borsalino, which was founded in 1857, as “bipolar, with two faces. It’s healthy but insolvent. ” He explained that the company itself is healthy, but that the former management and association with Marco Marenco, a former Borsalino owner, dragged the firm into a quagmire. As reported, Marenco was arrested in Lugano, Switzerland, at the end of April. He had been wanted by the police since last summer for fraudulent bankruptcy and tax evasion related to a web of holdings, mainly in gas and energy, for a total worth of 3.5 billion euros, or $3.9 billion at current exchange.
Marenco’s interests at one point included Borsalino, which was made famous by countless movies including “Casablanca” and “Indiana Jones.” A-listers from Johnny Depp and Justin Timberlake to Nicole Kidman have been spotted wearing Borsalino looks. Moccia reiterated that Marenco had not been involved in the company since 2008 and had no executive power or strategic interest in Borsalino.
Since arriving at Borsalino, Moccia, who is charged with reorganizing the company, has streamlined its production, terminating collaborations on a roster of products including bicycles, umbrellas, perfumes and apparel, with a focus on expanding the women’s category; targeting a younger consumer, with the launch of the “cashwool beanie” for fall 2013-2014, for example, and returning to classic designs, and raising the luxury content. The men’s division accounts for 65 percent of sales. In two years, the women’s category has grown to represent 35 percent of revenues from 5 percent.
When Moccia joined the firm two years ago, Borsalino was posting a loss before interest, taxes, depreciation and amortization of 2 million euros, or $2.2 million. In the first quarter of 2015, the company recorded earnings before interest, taxes, depreciation and amortization of 200,000 euros, or $222,924. In 2014, sales totaled 13.5 million euros, or $15 million, and Moccia said the company has orders on hand totaling 15 million euros, or $16.7 million. He expects sales of between 18 and 20 million euros, or $20 and $22.3 million, in two years.
The executive has also closed eight stores that were no longer strategic or were underperforming. It now counts eight directly operated stores in Italy, including a “highly successful” unit in Milan’s shopping arcade Galleria Vittorio Emanuele II and one in Paris. Borsalino is available in 52 countries through a web of wholesale accounts, including top department stores, and last year opened a franchised boutique in Cannes.
The company is looking at expanding in the U.S. and has inked a five-year partnership agreement with Bollman Hat Company to exclusively distribute Borsalino collections in North America, starting with the spring 2015 season.
“We expect sales of 2 or 3 million euros [$2.2 and $3.3 million] in two years from the current 1 million euros [$1.1 million],” said Moccia of that market. The U.S. and Israel account for 25 percent of revenues of the religious division.
Japan is also a relevant market with sales of 2 million euros, or $2.2 million, while Europe needs to be further developed, noted Moccia.
The company has maintained its production in Alessandria and all of its 120 employees, with further hires planned. It has brought certain production back in-house, including that of straw hats. Keeping manufacturing in Italy is a priority, and one that Camperio has guaranteed, said Moccia, who remarked on the 52 manual steps over seven weeks to make a felt hat. Machines invented for Borsalino and dating back to the 1800s are still in use.