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Wednesday / June 19.
HomeminewsHAL Holdings Finalise Major Share of Safilo

HAL Holdings Finalise Major Share of Safilo

Dutch investment company HAL Holdings, parent of Pearle Europe, GrandVision and other global eyewear chains has added greatly to its eyewear assets with its major recent investment in the Safilo Group (SFLG.MI).

Originally, HAL aimed for a 60 per cent tender threshold, but a 50.99 per cent tender offer from Safilo Group (launched 19 October last year) failed to raise the desired amount despite two deadline extensions. Nevertheless, on 30 November HAL announced it would accept Safilo’s tender offer and would proceed with its planned acquisition of an equity interest in Safilo. The deal is expected to close in the first quarter of 2010. As a result, HAL has received the required antitrust approval from the European Union for its planned acquisition of a stake in Safilo Group.

In a statement, the European Commission said: “the horizontal overlap and vertical relationship between the activities of HAL and Safilo are limited and…for all products concerned, they will continue to face strong competition”. This ruling was one of the steps HAL needed to clear the way for the acquisition of an equity interest in Safilo of between 37.23 per cent and 49.99 per cent, in return for infusing €240 million to €330 million in funding into the company.

Safilo Group has sold to HAL its non-core retail activities, including the Spanish retail chain Loop Vision, Just Spectacles in Australia and all of the retail stores in the People’s Republic of China. HAL acquired these retail businesses for a total consideration of €13.7 million. Total 2009 estimated sales attributable to these assets are approximately €36 million, with a 2009 estimated negative EBITDA of €7 million.

Safilo will retain its U.S. sunglass chain Solstice (156 stores as at the end of 2009) and, for now, Sunglass Island and Island Optical shop chains in Mexico (59 stores as at the end of 2009)

Safilo will retain its U.S. sunglass chain Solstice (156 stores as at the end of 2009) and, for now, Sunglass Island and Island Optical shop chains in Mexico (59 stores as at the end of 2009). In addition, the Company communicates that the lending banks have agreed to postpone to 30 June 2010 the repayment of the loan principle amounts due on 31 December 2009 (set by the contractual agreements of the existing senior loan) and to waive the relevant financial covenants as at 31 December 2009.

All the lending banks have also approved the amendment provisions of the existing senior credit agreement, already finalised by the company and Italian banking groups Intesa Sanpaolo and Unicredit Corporate Banking. This will become effective subject to completion of the capital increases and the partial repayment of the current senior facilities.

Eyewear news website Vision Monday reports that Safilo’s chief executive officer, Roberto Vedovotto, has already stated that the HAL deal represented his company’s last chance for survival. “Given the economic environment and the company’s performance, there is no other solution possible to save Safilo Group,” he said bluntly during an October conference call with financial analysts. Vedovotto will reportedly retain his position as Safilo’s CEO once the deal closes.

According to Vedovotto, the Tabbachi family – who now control 39.3 per cent of Safilo’s stock through their Only 3T holding company – will remain “important shareholders” in Safilo after the HAL deal closes, although the exact size of the Tabbachis’ eventual stake remains unclear.

Completing HAL’s acquisition of the equity interest in Safilo still requires several conditions, including approval by antitrust authorities in Italy, restructuring of Safilo’s senior bank debt (which is done) and the approval by Safilo’s stockholders.