By  on February 25, 1994

NEW YORK -- As The Gitano Group continues to negotiate with companies that want to buy it, the field of suitors is narrowing.

Robert E. Gregory Jr., Gitano's chairman and chief executive officer, said Thursday that he expected to make an announcement "early next week" concerning a purchaser, but added that negotiations are still going on. He declined to name the contenders or any terms of sale. Originally, Gitano's business adviser had said the company intended to make a decision by today.

Meanwhile, some big contenders admitted they are out of the race.

Mackey McDonald, president of VF Corp., said Thursday that while the company had put a bid in on Gitano, "we are not involved in the Gitano situation at this point in time."

"It's hard to say exactly what's going to happen," he added, "and depending on how things develop, we could get back in it."

Earlier in the day, McDonald had said VF, which also owns the Lee, Wrangler and Girbaud denim brands, was in the race and Gitano "would have a place" in its portfolio of companies.

Eric Rothfeld, owner and president of Sun Apparel, said Thursday that he had put a bid in for Gitano, but it had been rejected "within the last 24 hours."

"I know Wal-Mart, whom we do business with, was enthused about the deal," Rothfeld said. "It's a pretty powerful name, but it's a question of the price."

Bob Luehrs, president of the mass market jeans line Chic/HIS, said his company had been approached by Kurt Salmon Associates, which is handling the proposals, shortly after Gitano went on the market.

"I looked at it, but then I decided we didn't know what to do with it," Luehrs said. "What am I going to do, create another division and compete against myself?" Several sources indicated that Fruit of the Loom might be interested in acquiring Gitano. Calls to William Farley, Fruit of the Loom chairman, were not returned. Jerome A. Chazen, chairman of Liz Claiborne, which also has been mentioned in speculation about the sale, declined to comment.One industry executive said that he thought that Fruit of the Loom would emerge with Gitano.

"I know Fruit of the Loom really wanted them," said the source. "I know Farley really wants to get into the sportswear business."

As reported, a letter from KSA to potential bidders had stated that Gitano intended to decide on a purchaser by today and then complete the sale through a Chapter 11 filing.

Gregory added Thursday that if the sale does not go through, Gitano will not file for Chapter 11 bankruptcy.

"We've made money in the fourth quarter and we've paid the banks," said Gregory. "The only reason we'd file Chapter 11 is if we were bought, because no company would be interested in purchasing some of the horror stories we're still involved in." He declined to elaborate.

In the letter to potential bidders, however, it was implied that Gitano would file Chapter 11 even if there was no winning bid.

In announcing last month that it was putting itself on the block, Gitano said it did not believe the funds from the sale would be enough to settle the $130 million owed to secured creditors.

Gitano put itself up for sale after Wal-Mart Stores -- its largest customer -- stopped buying from the vendor following its admission of customs fraud.

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