MILAN — The founder of Fin.part is now a man a.part, and the company may be facing the scrutiny of Italian securities watchdogs.

A little more than one week after auditors refused to certify the company’s financial results, Gianluigi Facchini stepped down Sunday as chairman of Fin.part, the multibrand group he founded seven years ago.

Fin.part, which owns brands such as Cerruti, Maska and home linens group Frette, said a new chairman will be nominated at a board meeting on Wednesday and executive powers redistributed. Facchini was not available for comment.

As reported earlier this month, auditor KPMG declined to approve Fin.part’s 2002 accounts, citing "financial tension" in the group’s books.

In the meantime, Italian stock market regulator Consob said it suspects possible insider trading on Fin.part’s warrants and has notified the courts. The period in question dates back to November 2001, when Consob noted trading irregularities a day before Fin.part announced it bought time on paying back some of its bonds by postponing their expiration dates by a year.

A source familiar with the situation added that Consob is monitoring Fin.part closely and has requested that the company publicly release each month a detailed account of its debt and operational status.

"I think the situation could change rapidly," said one industry consultant familiar with the company. He said the group’s lenders may have pressured Facchini to leave the helm. "There are problems with cash flow and in terms of image with the banks that gave them money," the source said.

Facchini, who will stay on the company’s board, founded Fin.part in 1996 and embarked on an acquisitions binge that ultimately ingested brands including Cerruti, Frette, Maska and footwear firm Andrea Pfister. He set about creating his empire just as the industry consolidation and company selling prices peaked. Fin.part amassed a large amount of debt, comparable to the company’s yearly turnover.

Facchini said earlier this month that Fin.part’s debt stands at less than $441.6 million. Fin.part’s 2002 consolidated sales came to $505.6 million. Dollar figures have been converted from the euro at current exchange.

Elsewhere, Fin.part said Monday that KPMG did certify the accounts of all of its operating subsidiaries, including those of Frette SpA, sportswear unit Pepper Industries SpA and Cerruti Holding SpA.KPMG was not available for further comment but one industry source said the auditor’s approval of those units’ books is not significant as the cash crunch comes at the holding company level.

Earlier this month, KPMG said it couldn’t verify whether Fin.part had the "base conditions" needed to continue operating and questioned whether the company could carry out its strategic plan. Among the sticking points, KPMG said it had no evidence that Fin.part will succeed with plans for a capital increase or find buyers for the nonstrategic assets and real estate it wants to sell.

Fin.part responded by saying that KPMG didn’t consider pertinent information, including a guarantee for $49.7 million from its bankers or that the company is concluding the process of selling assets and finding new investors.

Facchini said last week that the group’s banks approve of Fin.part’s strategic plan and are willing to help recapitalize the company. He also said the company is in "advanced talks" to sell off some real estate and manufacturing assets. In contrast to prior strategies, he pointed out that selling brands isn’t in the cards, but it could be in the future.

Facchini’s strategy appeared to be constantly changing in the last few seasons. Just one year ago, he said the company would seek to sell most of its assets to reduce debt and focus on Cerruti. At the same time, there has been speculation that Fin.part wants to sell Cerruti as well.

The group hasn’t managed to sell much of anything. Last May, the firm did manage to sell sportswear brand Best Co. to its distributor, Cisalfa, but that barely dented the debt with just $2.7 million in proceeds from the sale. Elsewhere, Fin.part was trying to sell Frette to Bulgari-led fund Opera but those talks have stalled.

It had sought to sell Pepper, which produces the Marina Yachting, Henry Cottons and Moncler labels, by the end of last year but was unable to find a buyer and has focused on real estate and Frette since.

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