Valentino to Sell Bonds to Repay Bank Debt

Valentino is set to sell bonds to replace its bank debt, following other luxury companies that have turned to institutional investors for financing.

The Italian fashion house’s board approved the €450 million ($512 million) note sale in late June, according to a corporate filing. The senior secured bonds are expected to be issued by August, the filing said.

The new funding represents a step forward after Valentino last year required a capital injection from shareholders and struck a deal with lender banks to refinance its liabilities. The company had breached the terms of its bank debt, Bloomberg reported at the time, after a slowdown in demand for luxury goods battered its results.

Proceeds from the new notes will be used to repay Valentino’s bank debt early and to meet investment and working capital needs, according to the document.

The fundraising is backed by a commitment from shareholders Kering and Mayhoola to inject up to €250 million of equity should the company struggle to keep up with payments or meet the debt covenants, the filing said.

Valentino isn’t the only fashion house to have recently tapped the private bond market. Prada completed a private sale of €300 million of 10-year bonds earlier this year.

This notes, initially to be underwritten by HSBC, will mature in 2033, and will pay an interest equal to the Euribor 6-month benchmark plus a 3 percent margin, according to the document.

The bonds won’t be listed on a regulated market, nor be rated. They will be amortising, with partial repayments due to kick off two years after issuance.

By Luca Casiraghi and Giulia Morpurgo

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