MILAN — The deadline for Plaid Clothing Group PLC to acquire troubled Gruppo GFT came and went with no result Thursday as bankers and Plaid officials here negotiated far into the night.
Although some of GFT’s leading creditor banks are reportedly getting impatient, sources said Plaid has essentially won yet another extension — to the end of September — to complete the purchase of Italy’s leading designer apparel maker.
While sources close to GFT and Plaid have asserted that the deal is sewn up and that these are merely technical meetings to level the mountain of contractual details, other sources suggested that the main stumbling block is that, despite repeated extensions, Plaid hasn’t been able to put all the money on the table.
“If they had come up with the money, they would have closed this deal today,” said one source here Thursday.
As reported, Plaid has offered $249 million (390 billion lire at current exchange rates) to acquire GFT, Italy’s leading designer label manufacturer, with annual sales of some $890 million (1.5 trillion lire). Sources said Plaid is still trying to arrange financing for some $12 million of the purchase price.
The sources added that Plaid chairman Omar Al Askari has been meeting personally with GFT’s leading creditor banks in an effort to smooth the final financial issues, while lawyers for all the parties were engaged in nonstop meetings at Mediobanca, the Milan merchant bank that is coordinating the talks, to resolve myriad contractual issues between GFT’s creditor banks and the dozens of operating companies that make up Gruppo GFT.
“The talks are still going forward exclusively with Plaid,” said one source. “Plaid has gotten its offer in before the 15th, which has become an irrelevant deadline; it appears to be resolving the final financing issues and now it’s just a matter of time.”
However, a turning point could come in the next few days as GFT’s 26 Italian creditor banks are reportedly divided on how much more time to allow Plaid. While Banca Commerciale Italiana, one of Italy’s leading banks, is said to be squarely behind the Plaid bid, some of the other banks are reportedly starting to get impatient, including Instituto Bancario San Paolo di Torino, Italy’s largest bank. These banks have reportedly been pressing Mediobanca for a showdown meeting that would clarify Plaid’s status once and for all.
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In the interim, sources said two other bidders for GFT — Mexican entrepreneur Fabrio Covarrubias and venture capital firm CVC Capital Partners — were scrambling to strengthen their bids through new alliances and financial backers in the event the Plaid talks should break down. Further details couldn’t be obtained.
Meanwhile, insistent rumors that the Fiat group investment company Gemina could swoop in at the final hour to keep GFT in Italian hands, appear to have died down for the time being.
Gemina has repeatedly denied interest in acquiring GFT.
As GFT’s 20-month-long search for a buyer appeared to be marking yet another deadline with no solution immediately in sight, it was clearer than ever how high the stakes have become in this transaction, which involves some of biggest names in international designer fashion.
“I have never seen anything like this in my life,” commented one investment banker who has been following the GFT saga.
With the future of Italy’s largest designer apparel maker at stake, with top names such as Giorgio Armani, Calvin Klein, Claude Montana, Emanuel Ungaro and Valentino involved, “there have been major power plays going on,” the source said.
Although Plaid appears to be entering the final stretch in its bid, this negotiation has been full of surprises from the beginning. One of the first came when the big Italian apparel manufacturer Miroglio abruptly pulled out of a deal in the spring of 1993 after signing a letter of intent to buy GFT.
And words spoken by entrepreneur Covarrubias a few days before he lost out to Plaid on his first bid for GFT are still hovering over the negotiations.
“This deal isn’t closed until it’s closed,” he told WWD in an interview early this year.