Valentino SpA, an Italian fashion house, is preparing to sell 450 million, or about $512 million, of senior secured bonds as it moves to replace bank debt with financing from institutional investors. The company's board approved the planned note sale in late June, with issuance expected by August, marking another step in its refinancing effort after weaker luxury demand pressured its results and led to a shareholder capital injection and a bank-debt restructuring last year.
The proceeds are expected to be used to repay Valentino's bank debt ahead of schedule while also supporting investment and working capital needs. Investors may view the deal as a possible sign that luxury companies under pressure are increasingly looking beyond traditional bank lenders, especially after Valentino previously breached the terms of its bank debt during the sector slowdown.
The financing is backed by shareholders Kering (PPRUY), a luxury group, and Mayhoola, a Valentino shareholder, which have committed up to 250 million of equity if the company struggles with payments or debt covenants. The notes, initially underwritten by HSBC, are set to mature in 2033, pay Euribor 6-month plus a 3% margin, remain unlisted and unrated, and include partial repayments beginning two years after issuance, while Prada SpA, a fashion house, also recently completed a private 300 million sale of 10-year bonds.