Safilo Shareholder Talks with Potential Investors

MILAN (Reuters) – Italian eyewear maker Safilo SpA’s (SFLG.MI) main shareholder said it was in talks with potential investors and could dilute its stake in the company, boosting Safilo shares on hopes of a cash injection.

Only 3T, which has 39.9 percent of Safilo — maker of eyewear for designers like Gucci and Dior — said in a statement on Tuesday contacts were underway with several potential partners but no deal had yet been defined.

Safilo shares closed up 24.4 percent at 0.352 euros after brief limit-up suspensions. A bourse official said Safilo shares trade in a segment which closes at 15:35 GMT.

“Various options aimed at strengthening the capital structure of Only 3T and Safilo Group are being examined, with the aim of obtaining new financial means for the group,” Only 3T, controlled by the Tabacchi family, said in a statement.

“The Tabacchi family is willing, if necessary, to see its equity holding diluted,” it said.

Earlier Italian financial daily Il Sole 24 Ore had said the Tabacchi family may dilute its stake to 10 percent after a possible recapitalisation to relaunch the company. It said other options to relaunch Safilo were also being studied.

It said three private equity firms were in the running — CVC, Bain Capital and PAI. They were not immediately available for comment.

Only 3T had said in January it was talking to potential partners on ways to strengthen and develop the company.

Safilo said last month its 2008 net profit fell 71.3 percent to 14.6 million euros ($18.5 million), as demand slowed and high production costs in Italy also weighed.

Its net debt reached 570 million euros in 2008, up from 514.6 million euros at the end of 2007, but in line with the value registered at the end of September, it said.

“Safilo definitely needs a cash injection of at least 200 to 250 million euros,” UniCredit said in a note.

“We suppose the new partner could afford to pay up to 0.90 euro per share and still generate attractive returns, but Safilo’s price weakness in the last few weeks clearly favours the buyer,” the note said.

Fitch Ratings last month placed Safilo on “Watch Negative”, while Standard & Poor’s lowered its long corporate credit rating to “B-“. Moody’s downgraded Safilo to “B2”.

By Marie-Louise Gumuchian
(Additional reporting by Quentin Webb in London; Editing by Greg Mahlich and David Holmes)