Dolce & Gabbana secures debt waiver from banks after FY operating loss

MILAN, Aug 25 (Reuters) – Italian luxury group Dolce & Gabbana has reached an agreement with its lending banks to waive financial covenant breaches and shore up liquidity after reporting a fresh operating loss and higher debt, according to its latest financial statements.

• The privately owned group’s revenues fell 2% in the fiscal year ending on March 31 to €1.86 billion ($2.17 billion), according to a filing seen by Reuters on Tuesday.

• Growth in the beauty division helped offset a weaker performance in the group’s core fashion business, the company said.

• Operating loss totalled just over €100 million.

• Net financial debt increased to €464.5 million as of March 31 from 379.6 million euros a year earlier, breaching conditions attached to the group’s bank loans.

• Under a new agreement, the banks in the lending pool waived remedies related to covenant breaches and suspended covenant testing until March 31, 2028.

• In exchange, the group committed to complete “extraordinary financing transactions” to strengthen liquidity and to bring its net debt-to-EBITDA ratio under 3 by March 2028.

• Earlier this year a source said that the company, advised by Rothschild, was exploring ways to raise fresh money, including asset disposals such as real estate.

• Dolce & Gabbana has raised €150 million by extending its eyewear licence agreement with EssilorLuxottica until 2050, according to the filing.

($1 = 0.8573 euros)

(Reporting by Elisa Anzolin, editing by Alvise Armellini)