Prada Asks Banks For A Little Breathing Room
It seems that turmoil has hit most of the major fashion houses recently. A recession isn't pretty. The Financial Times is reporting that Prada has asked banks to ease terms on debt. The Italian fashion house is hoping to renegotiate some of its debt in order to have ready cash to create more stores. The company had a net debt of around 1 billion euros at the end of last year. The FT says that talks are underway to convince Italian banks UniCredit and Intesa Sanpaolo to reschedule the repayment of 350 million euros that matures in summer 2010. The debt in question is owed by a holding company, which is 95 percent owned by Miuccia Prada, the label's designer and her husband and Prada chief exec Patrizio Bertelli. They have stated they are not interested in bringing in outside investors at this point both because the situation isn't dire and also because any potential valuation of the company now might later have a negative impact on the Prada IPO. Prada has flirted with holding an initial public offering several times in the past couple of years but always backed out citing poor timing.
The banks are considering putting off repayment for a year or two. At a time like this banks can't afford to have their debtors in trouble and it would seem a wiser course to help Prada ride out the recession and then collect the money in brighter times.
