Sep 2, 2009
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Troubled Mariella Burani needs more than cap hike

Sep 2, 2009

Mariella Burani

By Marie-Louise Gumuchian and Simone Bagnacani

MILAN, Sept 2 (Reuters) - Italian "accessible luxury" goods maker Mariella Burani Fashion Group (MBFG.MI) may need to sell assets or find a partner in addition to a hefty capital increase it admits it needs to pull it out of its financial woes.

The company's "markedly uncertain situation" prompted the stock market to suspend shares indefinitely this week after it reported a first-half net loss of 142 million euros ($202.2 million) and debt of nearly 480 million euros.

"There could be a capital increase with the entry of a financial partner but that may not be enough. They could sell more assets but the problem is finding a buyer," one analyst who declined to be named said.

The company, which appointed a new CEO in July, is selling stakes in jewellery makers to focus on apparel and leather goods.

Founded in 1960, Mariella Burani is the latest luxury group to fall into financial difficulties as demand for clothes and accessories continues to feel the pinch of the global crisis.

IT Holding (ITH.MI), owner of fashion brand Gianfranco Ferre, went into special administration in February.

Mariella Burani, which sells classic womenswear, has already asked banks for a standstill agreement on debt and is looking at a capital increase for up to 100 million euros.

The Burani family -- with a stake of more than 70 percent -- is willing to subscribe to the cash injection with the help of a long-term partner -- strategic and/or financial.

Mariella Burani says contacts are in place with industrial partners interested in developing business in their countries with its brands. There are also talks with financial partners.

But it needs to put its house in order, analysts say, before anyone is likely to seriously commit to an investment.

"Until the accounts are approved, you cannot say anything because no-one fully understands the situation," said another analyst. "Only then will there be clarity".

Auditor Mazars said it was not expressing professional judgment on the half-year financial report, which included hefty asset writedowns and falling revenues.

A source close to the talks in Italy confirmed a report U.S. investment fund GEM was interested in the group, but did not give details. A request to GEM for comment was not answered.

"A new partner should be from the sector -- a holding or industrial partner. An only cash deal would not be enough to calm the market at a time when no-one has money to spend," a third analyst said. "But 100 million euros may not be enough." ($1=.7023 euros) (Editing by Mike Nesbit)

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