The situation with Safilo................

[Chris Ryser]

PRESS RELEASE: Fitch Cuts Safilo On Tender Offer Announcement


....................The tender offer will be open until 19 November 2009 with settlement on 24 November 2009. If the tender offer is successful, Fitch will downgrade the IDR of Safilo to 'RD' (Restricted Default) upon conclusion and settlement of the offer, reflecting default. Subsequently, Fitch would re-assess Safilo's IDR upon the conclusion of the proposed equity injections and senior debt extension ( anticipated by Q110), and in the light of its financial situation and strategy. However, if the tender offer is not successful and the equity injections do not proceed, Safilo is unlikely to be able to meet interest and principal payments due before year-end, unless other alternatives were forthcoming. This would be reflected in the 'C' IDR.

...........................While the above recapitalisation and extension of the senior debt facilities should be positive for Safilo in the medium term, Fitch views the tender offer for the senior notes as a CDE. Whilst not a standard CDE in that the senior notes will remain as a debt liability for Safilo at the full face value, the tender offer appears to meet Fitch's two requirements for classification as a CDE nonetheless. Firstly, it constitutes a loss for investors, by virtue of the offer price being 60% of the face value of the senior notes. Secondly, it is de facto coercive, as the company needs a recapitalisation if it is to avoid a payment default at year-end, but has stated that the proposed equity injections and senior bank debt extension will not go ahead unless the tender offer is successful in respect of at least 60% of the senior notes. By the time the tender closes, there would be extremely limited time to find a different solution before cash interest and principal payments fall due, furthermore, if the tender is unsuccessful, either scenario would indicate an IDR of 'C'. Effectively, senior notes investors are being asked to take a loss in order that the equity recapitalisation can take place. Although this debt instrument's outstanding amount is not reduced, equity and cash would be much improved and would place the company in a stronger position to survive the after-effects of the global recession.

http://www.nasdaq.com/aspx/stock-mar...r-announcement

[Johns]

Effectively, senior notes investors are being asked to take a loss in order that the equity recapitalisation can take place.

It's like watching a ship sink...

[FVCCHRIS]

Essilor, or someone acting as proxy, will wade in and "pick" them up. Safilo is a good line. Someone will use their manufacturing capabilities to make money.

[Johns]

Essilor, or someone acting as proxy, will wade in and "pick" them up. Safilo is a good line. Someone will use their manufacturing capabilities to make money.

\

What percentage of their lines do they actually manufacture? The last time I looked at them (VEW 2008), most of it was made in China.

[Fezz]

\

What percentage of their lines do they actually manufacture? The last time I looked at them (VEW 2008), most of it was made in China.

Wha, wha, wha, what????

Are you kidding me?

I thought that their big selling point was that they are an "Italian" manufacturer!!

Are you implying that this company that built it's reputation on "High quality Italian made frames" actually manufacturers most of their frames in China?!?

[FVCCHRIS]

Wha, wha, wha, what????

Are you kidding me?

I thought that their big selling point was that they are an "Italian" manufacturer!!

Are you implying that this company that built it's reputation on "High quality Italian made frames" actually manufacturers most of their frames in China?!?

Anyone on this board have info to enlighten us?? It would be a surprise to me also. :(

A quick check of their website shows manufacturing facilities in Italy, Slovenia, U.S.A. and PEOPLES R.O. CHINA!

[Johns]

Anyone on this board have info to enlighten us?? It would be a surprise to me also. :(

A quick check of their website shows manufacturing facilities in Italy, Slovenia, U.S.A. and PEOPLES R.O. CHINA!

It doesn't take Nancy Drew to figure out where most of their manufacturing is done. Take a look at the line. It's "write" there on the temple!

[Chris Ryser]

A quick check of their website shows manufacturing facilities in Italy, Slovenia, U.S.A. and PEOPLES R.O. CHINA!

WEhen they claim....Made In Whatever Europe....they are made in China and shipped front and temples separate and assembled in Europe and then stamped as made in ......
That has been done for many years.

[drk]

For those who know:

How would the optician be impacted by this, if you had inventory?

How would the optician be impacted by this, if you didn't have inventory?

Thanks.

[Johns]

For those who know:

How would the optician be impacted by this, if you had inventory?

How would the optician be impacted by this, if you didn't have inventory?

Thanks.

Do you mean the financial news?

I don't see where it would affect you either way. Now, restocking would be a whole different story.

[drk]

If you have inventory and the company goes into dire straits, then I see:

• More backorders
• More reps leaving
• Less customer service
• Probably less return flexibility
• Possibly being stuck with inventory that discontinues that can't be replaced by a ailing company

If you don't have inventory, you will see further consolidation of the frame manufacturing industry.

[Striderswife]

Can someone explain this to me in a more simple way? I see words like equity, debt and principal, and I know what those words mean. But the way the press release is worded, I've kind of glazed over by the time I reached the end. Does it mean Safilo is bankrupt? I've heard of other big businesses that filed for bankruptcy, but are still around (like K-Mart). They just "restructured" and everything's in the black again. Is this what's happening?

We do carry some Safilo product, but only a few lines: Team/Elasta (which can easily be replaced by. . . anything), Valentino (which I'm trying to sell through), Juicy (which does really well), and Banana Republic (that I just traded for my Guccis that weren't moving). If we had to drop them totally, I don't think we'd be hurting from it. There's plenty of other brands that do great for our patient base.

[Uncle Fester]

Can someone explain this to me in a more simple way? I see words like equity, debt and principal, and I know what those words mean. But the way the press release is worded, I've kind of glazed over by the time I reached the end. Does it mean Safilo is bankrupt? I've heard of other big businesses that filed for bankruptcy, but are still around (like K-Mart). They just "restructured" and everything's in the black again. Is this what's happening?

We do carry some Safilo product, but only a few lines: Team/Elasta (which can easily be replaced by. . . anything), Valentino (which I'm trying to sell through), Juicy (which does really well), and Banana Republic (that I just traded for my Guccis that weren't moving). If we had to drop them totally, I don't think we'd be hurting from it. There's plenty of other brands that do great for our patient base.

Safilo is operating at a loss right now and cannot repay it's loans. They are trying to get venture capitalists(?) to give them enough money to pay loans due shortly in exchange for significant partial ownership of Safilo.

Safilo may be cheaper to buy in bankruptcy than what was originally thought by avoiding it so a lot of number crunching is going on by the potential buyer right now to be sure they're not paying more than they have to.

[Striderswife]

Safilo is operating at a loss right now and cannot repay it's loans. They are trying to get venture capitalists(?) to give them enough money to pay loans due shortly in exchange for significant partial ownership of Safilo.

Safilo may be cheaper to buy in bankruptcy than what was originally thought by avoiding it so a lot of number crunching is going on by the potential buyer right now to be sure they're not paying more than they have to.

Why didn't they say so in the first place?? Thanks for the explanation!

[jpways]

IDR=issuer default rating- the likelihood (as measured by Fitch) of a company defaulting on their unsecured debt goes from AAA (highest, means company is expected to pay 100% of obligations with no risk of default) -> D (Lowest, means the company is currently in bankruptcy is or starting the process to go into bankruptcy) (pages 7-9)
RD-second lowest rating in the IDR. It means that Fitch feels that the company has defaulted on some or all of its unsecured debt, while it is possible for the company to go into bankruptcy there is not an immenient threat of that happening (page 8)

source: http://www.fitchratings.com/web_cont...and_scales.pdf

[Uncle Fester]

IDR=issuer default rating- the likelihood (as measured by Fitch) of a company on default on their unsecured debt goes from AAA (highest, means company is expected to pay 100% of obligations with no risk of default) -> D (Lowest, means the company is currently in bankruptcy is or starting the process to go into bankruptcy) (pages 7-9)
RD-second lowest rating in the IDR. It means that Fitch feels that the company has default on some are all of its unsecured debt, while it is possible for the company to go into bankruptcy there is not an immenient threat of that happening (page 8)

source: http://www.fitchratings.com/web_cont...and_scales.pdf

Another lesson learned on Optiboard! Thanks jp :cheers:

[oceanboy]

I heard from a friend of a friend ( optical grapevine ) that Safilo has been wholely bought out by HALO (? ) or some such sounding company.
Can anyone verify / clarify???

[Jacqui]

From what I hear HAL is looking at them.

[Jacqui]

More

http://eyeoverheard.wordpress.com/20...lks/#more-6274

[Chris Ryser]

Here is a little easier to understanf version of the news: Tomorrow November 18, is the day



Safilo Falls Most in 8 Months on Warning of Default Possibility

By Armorel Kenna and Marco Bertacche

Nov. 12 (Bloomberg) -- Safilo Group SpA, the world’s second- largest eyeglasses maker, dropped the most in eight months in Milan trading after saying it may default on its banking debt if an offer for its bonds from Hal Holding NV fails.
Safilo shares dropped as much as 10 percent, the most since March 9, and were down 6.2 percent to 52.8 euro cents at 1:19 p.m., giving the Padua, Italy-based company a market value of 151 million euros ($226 million).
Hal, whose investments include control of optical retailers GrandVision SA and Pearle Europe BV, agreed to buy a controlling stake in Safilo on Oct. 19. The deal is subject to a 300 million- euro bid for Safilo’s bonds, for which Hal must capture at least 60 percent. Netherlands-based Hal said yesterday that only 1.03 percent of the notes, in addition to a previous 38.76 percent, have been tendered and said if the offer isn’t successful, the transaction may not occur. The offer ends Nov. 18.
“In such event, the overall recapitalization plan might not take place and the company would again be in a highly leveraged situation and will, in all likelihood, default under its banking facilities by year-end,” Safilo said in a statement late yesterday.
“After a 30 percent share price rally in the last three months, the valuation does not fully reflect the probability of default,” analysts at Exane BNP Paribas said today in a note. They cut their rating on Safilo to “underperform” from “neutral.”
Safilo’s third-quarter net loss widened to 50 million euros from 6.7 million euros a year earlier, the company said in a separate statement yesterday.
The Italian company also makes Carrera sunglasses and produces eyewear under license for designer labels including Giorgio Armani, Gucci and Juicy Couture.
Milan-based Luxottica SpA is the world’s biggest maker of eyeglasses.

http://www.bloomberg.com/apps/news?p...d=aXEGrvhLPylA

[DragonLensmanWV]

WEhen they claim....Made In Whatever Europe....they are made in China and shipped front and temples separate and assembled in Europe and then stamped as made in ......
That has been done for many years.

Seems to me that the Italians just passed tougher laws to get that Made In Italy tag.

[EdgeOptical]

today is the big day for them right?

Any new News?

[Fezz]

Safi-who?

[EdgeOptical]

nevermind, found something.... looks like they got a nine day life line

Hal Extends Tender Offer for Safilo’s Senior Notes Until Nov. 27 By John Buckley


Nov. 18 (Bloomberg) -- Hal Holding NV said it extended the offer period for outstanding senior notes issued by Safilo Capital International SA until Nov. 27. The extension also applies to the consent payment deadline, Hal said today in an e- mailed statement.
Last Updated: November 18, 2009 11:44 EST

[Johns]

Safi-who?

Safi-Lowwwww! :D