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Permira close to cutting Valentino’s debt by a third

8 Dec 2009

UK buy-out house Permira is set to close a deal to cut the debt of Italian fashion house Valentino, which it counts as one of its portfolio companies, according to reports.

The deal will reduce Valentino’s debt by a third to about €1.5bn. Permira and other investors in the fashion house are close to agreeing on paying €200m to €300m for €730m of debt from Citigroup.

Citigroup has already reportedly written down the debt to 40 cents in the euro.

Permira bought the famous Italian brand for €5.3bn in May 2007, the peak of the credit bubble.

The deal is said to allow Valentino to avoid breaching covenants at the end of the year.

Permira has already written down its investment in Valentino by more than half.

Luxury brands have suffered at the hands of the downturn. Private equity firm Candover wrote off its 50.2 per cent stake in yacht maker Ferretti in March this year. The firm acquired the stake in Ferretti in 2006 in a deal that valued the company at €1.7bn.

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