By  on February 10, 1994

MILAN -- Mexican industrialist Fabio Covarrubias said Wednesday he is rounding the final bend of talks to acquire troubled designer label producer GFT SpA.

"I would say we have reached agreement on 95 percent of the issues on the table. The outstanding 5 percent are technical points," said Covarrubias during an interview in Milan. He was here to meet with Mediobanca, the merchant bank that has been masterminding the GFT rescue operation, and GFT's creditor banks to outline the final aspects of his bid.

"On the other hand, we are still in talks, and this agreement isn't done until it's done," cautioned the 36-year-old entrepreneur, who is a leading businessman in his own country and claims a net worth of some $900 million.

Covarrubias, who acquired GFT's Mexican operations last March, said he has offered to pay $212 million (360 billion lire) at current exchange in two bond payments to acquire full control of GFT, which is currently in the hands of the banks.

Under terms of the accord, an initial payment of $74 million (125 billion lire) would be made at the signing of the preliminary agreement. This signing could take place at the beginning of March, if the final phase of talks moves according to plan.

The balance would be paid at the end of July, with Covarrubias then acquiring full control.

In exchange, the banks have agreed to write off 40 percent of GFT's total debts, which amount to about $354 million (600 billion lire), not including debts incurred by GFT's German operations.

If the agreement is concluded on these terms, GFT would practically be debt-free at the moment Covarrubias assumes control.

Although he declined to comment on the points still being discussed, sources familiar with the talks said the parties are dickering over some $5 million in interest payments for the first two months of the year.

Along with a group of partners, Covarrubias controls interests in Mexico in real estate, fertilizers and finance. He said he had been looking to invest in the textile and apparel sector for some time.

After acquiring GFT de Mexico SA last year, his interest in the mother company started to grow, particularly in view of the opportunities opened up by the North American Free Trade Agreement, he said.

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