Prada doesn't wear debt well

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TEXT OF STORY

Bill Radke: There are rumors that Prada is in talks to be acquired by the Swiss luxury goods company Richemont. Prada says it's not true, but there's no denying the Italian fashion powerhouse
has a lot of debt and could really use some cash. We asked Marketplace's Alisa Roth to look at Prada's options.


Alisa Roth: Prada may be synonymous with fancy Italian fashion, but the company has more than a billion dollars of debt. And the recession has all but shut down what used to be its biggest markets --
Western Europe, Japan and the U.S.

John Guy: Prada needs to find additional funding.

John Guy follows the luxury business at MF Global Securities. He says Prada's tried -- and failed -- to go public a couple of times. It's also reportedly turned down a couple of offers from private equity firms.

Guy says it'll need money to move into the markets where people are still buying luxury goods: emerging economies in places like Asia and the Middle East.

Guy: Now whether or not that comes from a listing or whether or not that comes from selling part of their business privately, they definitely do need to find additional funds.

Guy says he wouldn't be surprised if a small, family-owned company like Prada got gobbled up. Some of its competitors have done OK during the recession and seem to be in the mood for a little shopping spree.

In New York, I'm Alisa Roth for Marketplace.

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