Versace's Niece To Inherit Fashion House

On June 30 of this year a 50 per cent stake of Italian fashion house Versace will be inherited by the late great designer Gianni Versace's niece, Allegra Versace Beck. She will be the company's largest shareholder worth an estimated USD100m.

While the company is struggling with spiralling sales (down 17.5 per cent on last year) as well as contending with a not-so-hot-this-minute image problem, a refinancing of the House seems inevitable as a USD123m bond issues comes due this summer, which, of course, has to be paid.

Speculation that Italian banks have agreed to lend the company USD172 million will allow the House to repay the bond in addition to providing working capital. Pay-back from non-strategic assets such as Versace's art collection and real estate will, as analysts predict, half the debt which currently stands at USD144m.

Investors will be reluctant to part with their cash as Gianni's sister and current designer Donatella Versace will not relinquish more than 30% of the company. Investment would become more interesting were a majority stake in question. Any investor putting in money would want to execute some managerial control. This rings as especially true of the larger luxury groups, such as LVMH and Gucci Group. If anything, the recent dispute at Gucci with PPR should be a good learning curve for the House.

If a partner were brought in at Versace, Allegra's stake would be valued below 50%. While the young Versace is not planning to follow in her mother and uncle's footsteps to design for the house, an interested buyer could officially get control by dealing directly with Allegra. Soon the colour could fade from Donatella's face.