Italy's Safilo Group SpA (SFL.MI) warned Wednesday the shareholder that was trying to take it over had yet to meet a key condition for its recapitalization, and the struggling eyewear maker still risked defaulting on its debt.

The shareholder, HAL Holding NV of the Netherlands, agreed last month to help in the recapitalization of Safilo by injecting EUR283 million into it.

But the agreement was conditional on HAL buying at least 60% of EUR195 million worth of outstanding high-yield 2013 notes linked to Safilo by Nov. 18.

"(Safilo) has been informed by HAL that only 1.03% has been tendered at the Early Bird date (in addition to the 38.76% committed prior to the Tender Offer by existing Note-holders)," it said in a statement, which also reported a widening quarterly loss at the eyewear maker.

"The company has also been informed that currently HAL does not own any of the Safilo Notes itself," it said, adding that the chance that HAL's tender offer will not be successful could not neglected.

"In such event, the overall recapitalization plan might not take place and the company would again be in a highly leveraged situation and will, in all likelihood, default under its banking facilities by year-end," it added.

At the end of September, Safilo's net debt was EUR586.3 million. Its main creditors are Italy's two biggest banks--Intesa Sanpaolo SpA (ISP.MI) and UniCredit SpA (UCG.MI).

Safilo said its board had postponed an extraordinary shareholders' meeting by a month, to mid-December, as a result.

Under the terms of the agreement, HAL would increase its stake in Safilo to between 37.23% and 49.99%, from 2%.

For the third quarter, Safilo, a victim of the global economic crisis, posted a net loss of EUR50.1 million due to lower sales, higher taxes and the write-down of assets. Its net loss a year earlier was EUR6.7 million.

Net sales fell 7.1% to EUR212.6 million.

Company Web site: www.safilo.com

-By Gilles Castonguay and Chiara Vasarri, Dow Jones Newswires; +39 06 6976 6924; chiara.vasarri@dowjones.com

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