Byline: Sara Gay Forden

MILAN--It's all over between Plaid Clothing and troubled designer label manufacturer GFT.
GFT's creditor banks have voted to reject Plaid's bid to acquire GFT, leaving the coast clear for other offers, financial sources involved in the negotiations said Wednesday.
According to the sources, a number of GFT's less-exposed creditor banks got cold feet about Plaid's offer of $249 million (390 billion lire at current exchange) after other, higher offers rolled in.
With a higher bid, the 23 creditor
banks would not have to take a write-down on their GFT debt, which amounts to some $276 million (430 billion lire).
Under terms of the agreement with Plaid, banks holding 95 percent of GFT's total debts were required to approve the offer. A deadline of midnight Oct. 25 was set.
Sources said banks representing between 10 and 20 percent of the debt opposed the Plaid deal in the end, although some sources thought the voting was a face-saving formula for the banks holding the bulk of GFT's debt (who publicly supported the Plaid bid), and also a strategy to avoid possible legal action by Plaid.
As reported, Plaid paid some $7 million to obtain exclusive rights to negotiate for GFT, and although the company missed several deadlines to complete the deal, it had come up with apparently acceptable financing by a deadline imposed earlier this month.
The bank vote appears to shut the door solidly on Plaid's eight-month negotiation, but it's believed the company will recover its deposit. Plaid officials could not be reached for comment Wednesday.
"The next step is going to be to call a meeting with all the banks and decide how to proceed," said a spokesman for Mediobanca, the investment bank that has been handling the GFT rescue effort, adding that the meeting would probably take place next week.
If the banks agree, it is widely expected that Mediobanca will then hold an auction for GFT, which has been on the market for roughly two years now. GFT officials weren't available for comment.
As reported, there are at least two other serious bidders for GFT, although it is unclear at the moment whether either will press their suits now that Plaid is out of the picture.
According to sources close to Mexican entrepreneur Fabio Covarrubias, who owns GFT de Mexico and made a second offer to buy GFT a few months ago after his first bid failed earlier this year, Covarrubias has taken a back-row seat for the time being. Covarrubias had an agreement with U.S. investment fund Texas Pacific Group, which will move forward independently, the sources said.
If a new bidding cycle is opened up, Texas Pacific, which headed the Continental Airlines takeover in the U.S., is expected to make a new offer for GFT that is significantly higher than the $254 million (397 billion lire) made by Covarrubias. And venture capital firm CVC Capital Partners, which is associated with the Citicorp banking group, also has an offer for GFT on the table in the amount of $269 million (420 billion lire). A CVC spokesman said it was premature to discuss whether the offer would be raised.
In September, CVC announced it had struck agreements with Giorgio Armani and former GFT managing director Clemente Signoroni, in the event it succeeds in acquiring GFT. Armani later distanced himself from CVC, acknowledging that he was considering their proposals, but hadn't entered into any final agreement.
Signoroni, who suddenly resigned from GFT in June under mysterious circumstances, has declined to comment on his role in any GFT bidding.
Meanwhile, fresh rumors that Fiat group investment company Gemina will get involved in a new round of bidding were circulating in Milan.
"I know for a fact there have been contacts," said one financial source, who added that while Gemina might not be in a position to make an independent bid for GFT, it could be considering an alliance with another bidding group and a minority interest.
Gemina has repeatedly denied rumors it is interested in acquiring GFT. A Gemina spokeswoman said late Wednesday that "there was nothing new," and she was unaware of any contacts by Gemina about GFT in the past few days.
However, she added, "It isn't correct to say we aren't interested in GFT." GFT's stable of top designers includes Giorgio Armani, Calvin Klein, Claude Montana, Emanuel Ungaro and Valentino, but its financial difficulties have been severe for several years.
Valentino chief executive Giancarlo Giammetti downplayed any concerns about the failure of the Plaid bid, which represents the third time a serious negotiation for GFT has fallen through. "GFT certainly needs to know what its future will be, but the main thing is that in the meantime, the company is running smoothly," Giammetti told WWD. "It is buying fabrics, producing, distributing and selling--the main issue now is to give the company and its management security for the future."

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