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HomeminewsSafilo Buried Under Mountain of Debt

Safilo Buried Under Mountain of Debt

Italian company Safilo, one of the largest eyewear companies in the world, has suffered a loss of EUR136 million in the first half of the year from a EUR21.1 million profit just a year earlier.

Dow Jones has reported from Rome that talks with financial investors have been terminated.

Dow Jones reported that in a statement, “the debt-laden company, which recently had private equity firms Bain Capital and Pai Partners walk out of talks for a 30 per cent stake in the luxury eyewear company, said its net debt position improved. Its net debt position is now EUR592.1 million from EUR617.7 million reported in the first quarter.”

The company, which makes glasses for Gucci and Dior, said revenue fell to EUR562.1 million from EUR637 million in the first half of 2008.

Safilo said its American sales remained stable, while the European and Asian markets were weak.

The company is owned by the Tabacchi family with a 39.9 per cent stake. It recently reached an agreement with creditor banks to delay debt payment due 30 June to 31 December on its existing senior loan.

“The group will continue to focus on its core business, carrying out all necessary actions to improve operating performance, fully supported by its lending banks,” the company said.

In May, Standard & Poor’s Ratings Services said that it had lowered to ‘CCC+’ from ‘B-‘ its long-term corporate credit rating on Italy-based eyewear manufacturer Safilo SpA (Safilo).

“At the same time, we lowered to ‘CCC’ from ‘CCC+’ the issue rating on Safilo’s euro 195 million 9.625 per cent senior subordinated notes due 2013, issued by Safilo Capital International S.A. The recovery rating on the debt is unchanged at ‘5′, indicating our expectation of a modest (10 per cent to 30 per cent) recovery in the event of a payment default. All ratings remain on CreditWatch, where they were placed with negative implications on 13 February 2009,” the agency announced.

It said that the rating actions reflected Standard & Poor’s view that the persistent downturn in discretionary consumer spending will continue to affect Safilo’s operating performance and liquidity.

As for its Australian operations, Managing Director Roger Chick, remained tight-lipped except to say: “it’s business as usual.”

Only a couple of months ago, Paul Sheehan, then Managing Director of Safilo Retail Australia’s offshoot, Optifashion, received his marching orders from head office and more recently, Michael George, Safilo’s Sales Director in Australia, retired and has still not been replaced.

And to add to speculation about Safilo’s operations here, Roger Chick himself will retire at the end of the year and although a replacement was mooted, that person is said to have “taken a different direction.”

However, senior Safilo executives remain confident that the company will works its way through its current debt problems and will come back bigger and better than ever.