Byline: Sidney Rutberg, New York, and Sarah Gay Forden, Milan
NEW YORK--The Plaid Clothing Group's bid to acquire GFT SpA is still alive, at least according to Plaid. "The deal is definitely not dead," Robert J. Kueppers, executive vice president and chief financial officer of Plaid, said Wednesday. "We're still meeting in Milan. We're still working with the representatives of the Italian banks, and the last chapter in this saga has yet to be written. "There has been a flood of press reports on other offers, but we're still the only group that has the money on the table. We're pressing ahead with our offer." In Milan, it was learned that Plaid chairman Omar Al Askari was there with several associates meeting with the banks in an effort to identify exactly what it was about the bid that turned GFT's creditor banks off last month, when they failed to give Plaid's offer the needed number of approvals to satisfy the technical terms of acquisition. Although it isn't yet clear whether or not Plaid plans to improve its offer, either in terms of dollar amount or financial structuring, "Plaid is still running strong and very confident," a source close to the U.S.-based company said in Milan Wednesday night. "Plaid is still in the best possible position to close this transaction," the Milan source said. "No one else has finalized their offer." Mediobanca, the Milan merchant bank that is masterminding GFT's financial restructuring, has called a meeting with GFT's 23 creditor banks for Monday to decide the next step after the rejection of the Plaid offer. The door now may be open to some of GFT's other interested suitors, which include declared bidders Texas Pacific Group, in agreement with Mexican entrepreneur Fabio Covarrubias, and venture capital firm CVC Capital Partners, which claims to have accords with Giorgio Armani and Clemente Signoroni, former GFT managing director. Armani, however, has stated he was only considering such an arrangement. Courtaulds PLC, through its textiles division, has been rumored to be interested, although a spokeswoman declined to comment, and Fiat investment company Gemina, which controls the Fila SpA sportswear group, is also said to be taking a look. "At this point, it is difficult to make predictions before the banks meet," said a spokesman for Mediobanca. Although the spokesman declined to comment further about what turn the negotiations could take next, sources said they expected Mediobanca to enter into another private negotiation, rather than an auction. "Plaid can sit at the table like everybody else, but they've lost their exclusive," said one source familiar with the talks, "and it seems pretty clear now that Mediobanca is directing this whole thing, which could even go on for another three or four months." Meanwhile, Joseph G. Riemer 3rd, executive vice president of Plaid, who had been heavily involved in the Milan negotiations, is no longer with the company. "He has resigned to pursue other opportunities," Kueppers said, declining to elaborate. Riemer could not be reached. Last week, after Plaid's $249 million bid for the Italian designer firm failed to receive the requisite 95 percent acceptance from GFT's creditor banks, it was widely assumed that the eight months of negotiations had come to an end. While a $7.5 million deposit in the form of a letter of credit is not considered in jeopardy, Plaid has reportedly spent millions in attorney, accounting and investment banking fees in completing its due diligence and the negotiating process. Plaid also paid $2.1 million for an option designed to limit its exposure to possible increases in the lire against the dollar. That option expired on Sept. 15, according to a filing with the Securities and Exchange Commission. In New York, a source close to Plaid said Wednesday that some of the Italian banks may not be aware that Plaid has the cash available."This deal can be closed in two weeks, while it would be another six months before a new bid could be put together and completed," the source contended. While the GFT negotiations were going on, Plaid's earnings have been less than robust. In the six months to July 2, earnings of the men's wear company dropped to $428,000 from $3.5 million a year earlier. Sales were down 10 percent to $132.4 million, reflecting lower sales in most of its labels except the Brannoch line, which was up slightly, and Christian Dior and formalwear, which "increased significantly."
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