“That is when the management will define the business plan and provide a future outlook,” a market source said.
As reported, Vision Investment Co. LLC, controlled by Hussain Sajwani, the founder and chairman of the Damac Properties Group, this summer signed a binding contract with the Florence-based fashion company and its shareholder Varenne 3 to acquire 100 percent of the firm. This confirmed a WWD report on June 28 that the judge expected to rule on the sale had approved the offer made by Damac. Sources contend Cavalli’s CEO, Gian Giacomo Ferraris, was instrumental in the deal with Sajwani and that he is expected to stay on in his role. “The intention is to continue to position the brand in the luxury, ‘Made in Italy’ range,” a source said on Monday.
The binding agreement is in compliance with Cavalli’s so-called process of “composition with creditors” with the Court of Milan and it allows the business to continue while it holds discussions with creditors and implements a debt restructuring plan. Financial details and the amount of the debt were not disclosed, although sources peg the transaction at around 160 million euros and believe the agreement includes a capital increase of around 65 million euros and the payment of all creditors.
The deadline for creditors to oppose the restructuring of Cavalli’s debt was Sept. 30, but according to sources, nobody has contested the plan so far. “Barring any opposition, the Court is expected to approve the arrangement with creditors in a few days,” Luca Barbetti from the Filctem and Cgil Unions told WWD. “We have requested a meeting with the management, which has shown willingness, but suggested we speak after Oct. 15,” said Barbetti, who last summer described the Damac offer as “financially the most consistent and sustainable” in light of a relaunch of the company. That said, the unions want to understand the impact of the sale on the Cavalli workforce at the Sesto Fiorentino headquarters.
The buyer has presented an industrial plan, which is being evaluated by a judge of the Court of Milan. The judge is expected to rule in the next 10 to 15 days on Cavalli’s agreement with creditors that was submitted on Aug. 2, a source said. Only after the judge’s approval will the transfer of shares to the new owner be completed.
At the end of March, the Roberto Cavalli SpA board revealed that it had decided to file a restructuring plan with the Court of Milan. That was followed by Cavalli’s American subsidiary Art Fashion Corp. filing for Chapter 7, ceasing all operations. Creative director Paul Surridge exited the fashion house in March. The brand has not officially presented its spring men’s or women’s wear collections.
A property developer, Damac is based in Dubai, and it was especially interested in Cavalli because its strategic investment arm Dico International is working on a five-star hotel tower in Dubai that is expected to comprise 220 rooms and to be completed in 2023. When the deal was revealed, Ferraris said this was the first of at least five hotels, called Aykon, to open in 10 years and to be decorated by Cavalli. Damac, which is one of the top 10 companies publicly listed on the Dubai Financial Market with a market capitalization of $4 billion, is funding the project with an investment of $500 million. Damac is also building Just Cavalli villas in Dubai.
Italian private equity fund Clessidra Sgr took control of Cavalli in 2015 through its Varenne vehicle, which at the time included L-GAM and Chow Tai Fook Enterprises Ltd., but has been looking to exit the fashion business, according to sources. In May 2016, Italmobiliare SpA, the publicly listed investment group owned by the Pesenti family, took control of Clessidra for roughly 20 million euros.