By  on March 10, 1994

MILAN - Just as Mexican industrial magnate Fabio Covarrubias appeared poised to acquire control of troubled Italian manufacturer GFT SpA, at least one new bidder - and possibly another - has emerged.

Plaid Clothing Group, a U.S. men's wear manufacturer owned by a group of Bahranian investors, has outlined an offer to the Italian banks that control GFT.

One well-placed GFT executive said there are talks with not one, but two new groups, but the identity of the second suitor could not be learned at press time.

According to sources, Plaid Clothing has offered to make a cash payment to the banks covering 60 to 65 percent of GFT's total debt load. Plaid's deal is said to be worth $212 million (360 billion lire) to

$230 million (388 billion lire).

In comparison, the Covarrubias group, which had expected to sign a preliminary agreement with GFT this week, has offered to pay 60 percent of GFT's total debt, plus bank interest for the first few months of 1994.

While Plaid is apparently offering cash, a new agreement could take several months, since it still has to complete due diligence on the Turin-based GFT. Plaid is being represented in Milan by investment bank Euromobiliare.

Covarrubias's offer amounts to $236 million (400 billion lire) in two bond payments. Under the proposal, an initial payment of $74 million (125 billion lire) would be made at the signing of the preliminary agreement. The balance would be paid at the end of July, with Covarrubias then acquiring full control of GFT.

As part of a sale to Covarrubias or Plaid, the banks have agreed to write off 40 percent of GFT's total debt. GFT's total debt amounts to $354 million (600 billion lire), not including debts incurred by its German operations.

Plaid's holdings in the U.S. include J. Schoeneman and The Palm Beach Cos. Executives at Plaid declined to comment on its bid for GFT.

This might not be the first overture Plaid has made to GFT. The company was said to be a contender last year for GFT's Mexican operation, which was eventually bought by Covarrubias.

In early February, Covarrubias said his firm and GFT had reached agreement on "95 percent of the issues on the table."But a GFT executive told WWD Wednesday, "It's a bit like the Ciga hotels story, where Forte talked too much, telling everyone they had a deal when they really didn't; then it turned out Sheraton got it. One of the big issues [with GFT] is that the Mexicans really want to run the company, as opposed to others who are more interested in a return on investment."

According to a spokeswoman for Covarrubias, the Mexican industrialist arrived in Milan Wednesday and is "not worried."

"He's still in position to gain control of GFT," the spokeswoman said.

Reportedly, Mediobanca, the merchant bank that has masterminded the financial rescue plan for the money-losing GFT, presented both offers to GFT's creditor banks on Wednesday.

GFT manufactures for various leading designers, including Giorgio Armani, Valentino, Claude Montana and Emanuel Ungaro. While most designers had initially given a green light to Covarrubias, some now appear receptive to alternative offers.

Giancarlo Giammetti, chairman of Valentino, said: "The financial results have improved so much that we don't have to jump on the first horse. I have recently seen another group [besides the Mexicans]. I can't say who they are, because of a confidentiality agreement, but they are not Italian. "My personal opinion is that maybe GFT doesn't even need to be sold; perhaps it can go on with the banks as a partner."

As reported in January, Clemente Signoroni, GFT's managing director, said 1993 sales totaled $822 million (1.39 trillion lire) and that the company posted an operating profit of $17.7 million (30 billion lire), compared with an operating loss of $11 million (18.6 billion lire) in 1992. He predicted that the company's restructuring plan will result in further improvement in its balance sheet.

Furthermore, GFT's creditor banks recently put together a bridge financing plan of $89 million (150 billion lire) to meet capital requirements under Italian law, to avoid bankruptcy.

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