In the coming weeks, Luxottica may seek to place $300 million worth of 10-year bonds with institutional investors based in the USA to refinance the acquisition of Oakley, according to the Italian daily Il Sole 24 Ore. The report, which was not confirmed or denied by a press spokesman for the group, sent its depressed stock up by nearly 4 percent to around €19.30 a share.
The newspaper said the placement could be completed by the end of May or early June, after a road show in the USA. The arrangers of the placement would be UniCredit Market & Investment Banking and Bank of America, which previously granted Luxottica a $500 million financing facility. The proceeds of the private placement will be used to refinance the $2.1 billion acquisition of Oakley completed in November last year.
In August last year, Luxottica announced that the takeover would be financed thanks to a $1.5 billion amortizing term loan with a maturity of five years and a $500 million short-term bridge loan underwritten by Bank of America and UniCredit Market &Investment Banking. Luxottica highlighted that the $500 million facility could be partially refinanced with a U.S. private placement when market conditions were favorable.
Il Sole 24 Ore cited a banker involved in the deal as saying that after the recent credit crunch there now is a window of opportunity for raising debt in the market for solid companies. Luxottica had a net debt of €2,729 million at the end of March, representing 2.38 times EBITDA. However, the ratio is expected to fall to 2.20 times at the end of the year.
The world's largest eyewear group does not have a credit rating because it has no listed bonds and will probably not need one if it carries out a private placement.
Meanwhile, Safilo said it was still working with banks regarding the refinancing of a high-yield bond and no news on that front is expected before the summer. Safilo's bond carries an annual coupon of 9.625 percent and expires in May 2013, but the company is free to repay it from May 15 this year. As of the end of 2007, the company still had to repay €195 million in capital on the bond. Safilo's overall net debt stood at €552.0 million at the end of March.
The rating agencies Standard & Poor's and Fitch both have BB- ratings for Safilo and the bond, while Moody's gave the company a BA3 rating and the bond a B2 rating.