( Reuter )- Fashion company Hugo Boss' business is unconstrained by paying a special dividend demanded by private equity investor Permira (PERM.UL) and rising debt, its chief financial officer said in an interview on Sunday.
"Debt is not a problem," Joachim Reinhardt told Germany's Euro am Sonntag magazine. "The size of the special dividend and the debt are appropriate and in no way critical for the company."
Indeed, Boss has gained financial maneuvering room through new credit lines granted by banks, he said.
Some analysts downgraded Boss earlier this month after the company said it would increase its regular dividend and pay a special dividend of around 350 million euros ($552 million), saying they were worried the company would no longer be able to invest in its franchise.
The company's shares have fallen 13.5 percent over the last month, lagging a 3.6 percent drop in the mid-cap MDAX (.MDAXI) index.
Last week, Boss launched syndication of a five-year 750 million euro loan that partially backs the special dividend, which is being paid to help majority owner Permira pay for its takeover of Italian fashion house Valentino.
Boss said its interest payments would rise significantly this year due to the special dividend financing.
Debt is expected to rise to a range of 500 million to 600 million euros by the end of the year, from around 200 million at the end of 2007.
Reinhardt told the magazine his company was still looking to buy a top-range brand.
"We are looking for a small brand that with Hugo Boss' help can quickly reach its growth potential," he said, adding British fashion house Burberry (BRBY.L) was too large to fit Boss' target criteria.