Safilo has pushed back the expiry date of its €150 million revolving credit facility to Nov. 30 from July 29. The company said that it had “requested and obtained” the extension from its lenders as part of ongoing refinancing talks.
The renewal of the credit facility is crucial to shore up the group's weakened financial situation, stemming from the deterioration of its operating cash flow. In April, when Moody's downgraded Safilo's credit rating to B1 from Ba3, with a stable outlook, it forecast that Safilo's operating cash flow would remain negative for the next two years.
The rating agency noted that at the end of 2017 Safilo had €77 million of cash on hand and would benefit next October from the last instalment of €30 million due to be paid by the Kering group for the early termination of the Gucci license. It pointed out that the existing and anticipated cash “barely covers” Safilo's €65 million in short-term debt payments and expected €35 million in capital expenditure.
However, Moody's added, historically, Safilo's short-term debt has been rolled over, limiting the need to draw on the group's resources. The agency's stable outlook takes into account the successful refinancing of the revolving credit facility as well as the risk that LVMH will not renew its license agreements with Safilo.