PLAID INCREASES BID $27M IN ITS 'FINAL' TRY FOR GFT
Byline: Sara Gay Forden
MILAN--In what it called its "final" effort to acquire GFT, Plaid Clothing Group raised its bid for the troubled designer label manufacturer Monday by $27 million (40 billion lire). Meeting with GFT's 23 creditor banks here, Plaid raised its offer to $276 million (430 billion lire), in what it described in a statement as a "fully financed, final, cash bid." The new offer matches the amount of GFT debt the creditor banks are holding. "We don't think the company is worth more, or that there is anyone else ready with the cash to close in the time we're able to," Plaid chairman Omar Al Askari told WWD. "We couldn't have made it any more clear today that this is our final offer," Al Askari went on, adding that he had asked the banks to respond to the bid by Nov. 15, in hopes of closing the deal by the end of the year. As reported, Plaid's previous offer of $249 million (390 billion lire) failed to win approval last month from the full quorum of creditor banks. Banks holding 90 percent of GFT's debt will have to approve the new bid for the deal to go through. A spokesman for Mediobanca, the Milan merchant bank coordinating GFT's search for a new owner, said that the creditor banks will have about a week to evaluate the new offer, and that there are no plans to proceed immediately to an auction of GFT. "There will be a brief pause to reflect on this offer," the spokesman said. In the meantime, Plaid has also renewed its $7.5 million letter of credit, which it had initially arranged as a payment to secure its exclusive right to negotiate for GFT. Al Askari, who has been in Milan with a team of Plaid executives meeting with the GFT creditor banks to determine what went wrong with their first bid, said he thinks it faltered because of the price issue. As reported, with improvements in GFT's performance and higher bids waiting in the wings, some of the banks got cold feet on Plaid's first offer and wanted to hold out for a higher amount, so that they would not have to write off portions of the GFT debt. "I don't think it's a nationalistic argument," Al Askari said, in reference to debate here about whether or not GFT should remain Italian-owned. "Capital has no boundaries today, and I don't think that anyone in senior management positions can think that way. It's too provincial--most countries these days are encouraging foreign investment," he added. Al Askari said that Plaid, which is headquartered in the U. S., has decided to double its capital in order to build up its financial muscle for the acquisition, in addition to already arranged financing through Prudential Securities, Rabobank and Transamerican. "People said we weren't big enough to buy GFT. Well, we're going to grow," he said, noting that the first capital increase would take place simultaneously with the GFT closing. He said the capital increase will come primarily from Plaid's private investor group, which he heads. Plaid's existing capital is about $35 million, according to Al Askari. "And we're going to double it again within the next 12 months," he added. "We are not speculating in this industry, but building a global clothing company from within a troubled industry--we started with J. Schoeneman and Palm Beach Company. And now we see GFT as the best way to become a truly international player," he said. However, Askari emphasized that while GFT's performance has improved, "the turnaround is nowhere near complete." "There is no long-term plan, no strategy, no vision--you can't leave a company in that kind of condition and expect it to perform. And if this negotiation drags on another six or 10 months, they are taking a real risk of eroding the value of the company," he said.
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