The financial crisis seems to have touched everyone, from Miss Joanne Average on the street to our favorite fashion houses. Prada is the latest luxury label to feel the strain of the current economic climate, with The Financial Times reporting the brand has asked banks to ease the terms of their debt. The Italian label is hoping to renegotiate some of its debt, freeing up cash to create more stores. The company reportedly owed around 1 billion euros at the end of last year.
The Financial Times reports the brand hopes to convince Italy’s UniCredit and Intesa Sanpaolo to reschedule the repayment of 350 million euros, which is set to mature in the summer of 2010. That debt is owed by a holding company, which is 95% owned by Prada’s designer Miuccia Prada and her husband, Prada chief executive Patrizio Bertelli. The couple says they are not interested in recruiting outside investors at this point as their situation is not dire, and any potential valuation of the company now may later have a negative impact on the Prada IPO. Prada has considered holding an initial public offering several times in recent years, but always backed out due to poor timing.
The banks are considering delaying the repayment for a year or two. In this economic climate, the banks can’t afford to have their debtors in trouble, so it seems in their best interest to help Prada ride out the recession and collect the money in brighter financial times.
