Valentino in Talks with Creditors After Debt Covenant Breach

Valentino, in the financial tightrope. The Italian company, 30% owned by the Gallic giant Kering, accumulates a drop in sales that has led it to breach the terms of its agreement with creditors on debt, as Bloomberg has advanced. Valentino’s business, along with that of almost all the icons of the sector, has been affected by the slowdown in demand and consumption of luxury goods.

The company, controlled by the Qatari group Mayhoola, would now be negotiating with creditors to redefine some terms of the agreement, after it has exceeded the ratio of difference between revenue and debt, explained the same media. According to sources consulted by Bloomberg, Valentino first defaulted on this ratio in December, something that has “worsened significantly” after the company’s first half results.

Much of Valentino’s debt is made up of a 530 million euro loan agreed last year with a pool of banks, including Intesa Sanpaolo, Banca Monte dei Paschi di Siena, Banco BPM and Paribas. In that agreement, the company undertook to keep the difference between sales and debt below a specific threshold, which has not been disclosed, and to review it every six months.

Valentino received a bank loan of more than 500 million last year

The news comes shortly after Kering, which took that 30% stake in Valentino in 2023, agreed with the Qatari fund to postpone the acquisition of the rest of the company. As the group explained in early September, Valentino’s ownership structure will remain “intact” until at least 2028.

Mayhoola’s put options on Kering, exercisable in 2026 and 2027 for its remaining 70% stake in Valentino, were then postponed until 2028 and 2029, respectively. Kering’s call option to acquire Mayhoola’s stake in 2028 was also postponed, until 2029.

In April, the company released its latest results, which showed a downward performance, with a 22% drop in gross operating profit (ebitda) and a 3% decline in sales. Shortly afterwards, at the end of August, the Italian company changed captain after five years under the leadership of Jacopo Venturini, who has been replaced as CEO by Riccardo Bellini, former CEO of Mayhoola.