Italian fashion house Valentino is planning to sell a €450 million ($514 million) bond by the end of August to refinance existing bank debt, according to a corporate filing.
Revenues and earnings at the Italian luxury group declined further last year, prompting shareholders Mayhoola and French luxury group Kering EURONEXT:KER to commit additional financial support for 2026.
The planned seven-year senior secured bond, initially underwritten by HSBC, would mature in 2033 and pay interest at a rate equal to six-month Euribor plus a 3% margin, the filing showed.
Under an agreement with HSBC, Mayhoola and MFI Luxury, the vehicle through which Mayhoola and Kering control Valentino with 70% and 30% stakes respectively, could provide up to €250 million in the event of a covenant breach, the filing showed.
Last year Kering and Mayhoola injected €100 million into Valentino to shore up the Italian fashion house's finances after it breached loan covenants.
According to the minutes of Valentino's board meeting, the bond proceeds will be used for the early repayment of debt owed to a pool of lending banks, as well as for capital expenditure and working capital needs.
Italian daily Il Messaggero first reported the planned bond issuance.
($1 = 0.8747 euros)