SIMINT FINALLY CLOSES SALE OF U.S. UNIT TO ONG BENG SENG
Byline: Sarah Gay Forden
MILAN--Simint SpA, the Modena-based manufacturer of the Armani jeans line, announced Tuesday it has finally completed the sale of its troubled U.S. subsidiary, Simint USA, and its network of stores, Simint Retail, to the Ong Beng Seng group of Singapore for $20 million. Simint USA is the company behind the A/X Armani Exchange operation. The sale, which had already been approved by Simint's board of directors in June, had been held up by financial technicalities as the company's creditor banks had to approve the terms of the transaction, according to a Simint spokeswoman in Milan. She said Ong representative Bernard Heng signed the formal agreement Monday at a Simint board meeting in Milan. In addition, Simint also announced a number of moves that represent the effort of Giorgio Armani, who controls 22 percent of Simint and is now the company's single largest shareholder, to put the troubled sportswear maker back on its feet. Although Simint previously produced sportswear and/or children's wear for a number of designers, including Krizia, Moschino and Versace, all those licenses have been terminated and the bulk of Simint's business is now the Armani jeans line. Simint also controls a number of lesser-known Italian sportswear labels. Simint's board of directors Monday appointed Armani executive Giorgio Gabbiani, 54, chairman. He succeeds Massimo Varazzani, who, as reported, resigned last month in a dispute over the company's accounts when Simint announced a $141.4 million (222 billion lire) loss at current exchange for the year ended April 30, 1994. Gabbiani, who has been a Simint board member since June, 1993, is also financial director at Giorgio Armani SpA. The Simint spokeswoman added that in order to cover short-term financial needs at the company, Giorgio Armani has further agreed to defer credits for roughly $13.4 million (21 billion lire), bringing his total contribution to Simint's restructuring to nearly $45 million (70 billion lire). Armani had previously agreed to defer credits amounting to about $32.5 million (51 billion lire). The extra funds were necessary to cover additional losses at Simint SpA during the first four months of the year (which will be examined at a Simint board meeting set for Friday and may be restated), as well as some $6.4 million (10 billion lire) in losses incurred by the U.S. unit between the time the sale was announced and when it was concluded. "This is the proof that Giorgio Armani is committed to investing in Simint and bringing it forward," the spokeswoman said. "The company has suffered, but it is a solid company that has to put its past behind it." Gabbiani, in a telephone interview, said that the first, key, step in Simint's restructuring was the sale of the U.S. unit, which includes the warehouse and stores, but not the A/X Armani Exchange name, which remains the property of the Armani group. "There is a license agreement between Armani and the new company of the Ong Beng Seng group, Club 21," Gabbiani said. He added that Simint's financial restructuring plan is being handled here by Fincomit, an arm of the Banca Commerciale Italiana banking group. "Now our objective is to go back to producing sportswear and working with a little more tranquility than we have had in the past few months," said Gabbiani. Meanwhile, a shareholder's assembly has been set for Oct. 31 to approve the fiscal 1994 balance sheet and to decide whether or not to bring charges against Simint's former management for allegedly masking losses of $127.4 million (200 billion lire) before a controlling stake in the company was sold to the Armani group. As reported, former chairman Francesco Micheli sold his 22 percent stake in Simint in April to Armani and his sister, Rosanna Armani, who subsequently reduced her stake. --Fairchild News Service
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