Safilo unexpectedly announced that it had signed a five-year license agreement with Tommy Hilfiger Group., taking over from the U.S.-based Viva International group. The deal is valid until 2015, with the possibility to extend it for a further five years. It covers the design, production and distribution of prescription frames and sunglasses under the Tommy Hilfiger name. Safilo's first collection will be available in the autumn of 2010 in all Tommy Hilfiger stores and in optical shops, department and specialty stores around the world.

No financial details were given, but financial analysts estimate that the partnership could boost Safilo's annual sales by €20-50 million. Until April 2010, the license remains in the hands of Viva, which was negotiating the renewal of the agreement and is now being allowed to dispose of its Hilfiger inventory until next September.

The deal could also affect the Italian eyewear retailer Salmoiraghi & Viganò (S&V), which is ironically owned by Dino Tabacchi, the brother of Safilo's chairman Vittorio. The retailer became in May the exclusive reseller in Italy of Tommy Hilfiger eyewear after signing an agreement with the fashion group and Viva. S&V is expected to remain the brand's exclusive distributor in the country through the summer of 2010.

The management of Safilo has met the company's main licensees and at least one of them, Christian Dior, has reportedly indicated that it plans to continue its long-standing relationship with the company after its planned refinancing.

In the meantime, a series of hurdles to Hal Holding's partial takeover of Safilo have fallen and the odds are improving for its completion by March 31 as scheduled. The regulator of the Italian stock market, Consob, exempted the Dutch group from a statutory obligation to launch a full bid for the eyewear company. The European Commission also cleared the acquisition and Safilo's own shareholders approved two capital increases totaling nearly €263 million, which will enable Hal Holding to own between 37.23 percent and 49.99 percent of the eyewear company and become its largest shareholder by the end of 2010 at the latest. The Tabacchi family, which owns nearly 40 percent of Safilo, would be diluted to around 10 percent.

These were among the conditions set by Hal to go ahead with the deal, which also calls for Hal's purchase of Safilo's retail interests outside the U.S. The group also wants a restructuring of Safilo's bank debt. In the meantime, the rating agencies have reviewed their stances on Safilo. In a straightforward move, Moody's upgraded the company's long-term corporate credit rating from ?Caa3' to `Caa2' and the rating on Safilo's high yield bond from ?C' to `Caa3', after Hal received acceptances representing 50.99 percent of the bond in a public tender offer that finished on Nov. 30. The outcome of the tender opened the way to the recapitalization of the ailing eyewear company.

The decisions of the other two main agencies were more arcane. FitchRating lowered Safilo's Issuer Default Rating from ?C' to ?RD' (restricted default) but immediately upgraded it again to ?CC' to reflect the positive outcome of the tender offer. It also removed the company from negative credit watch.

Because of its own methodology, Standard and Poor's had to declare that Safilo had defaulted and lowered the long-term corporate credit rating from ?SD' to `D' and the rating on the bond from ?C' to `D''. S&P will reassess the ratings upon completion of Safilo's recapitalization.