Fitch: Safilo on watch

Fitch Ratings said it has placed the long-term and short-term issuer default ratings of Safilo SpA, which are B respectively, on rating watch negative due to concerns about Safilo's debt repayment schedule and liquidity.

Fitch said it has simultaneously affirmed Safilo's €400 million senior credit facilities at BB-/RR2 and Safilo Capital International SA's €195 million senior notes due 2013 at B-/RR5.

"The rating watch negative reflects the potential weakness in the company's debt profile as the €40 million in scheduled amortisations due in 2009 will put pressure on free cash flow, which was already negative in 2008, and on the level of committed liquidity, which has shrunk further to just €35 million at Dec. 2008," said Michelle De Angelis, a senior director in Fitch's leveraged finance team.

"Furthermore, the company still needs to agree an amendment to financial covenants on its committed senior facilities, which the agency believes could otherwise be in breach at the June 2009 test date."

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