Milan — Raising its offer for GFT SpA to the equivalent of $375 million (600 billion lire), Gemina SpA, a Fiat investment group, has beaten back a last-minute bid by CVC Capital Partners to capture the designer-label manufacturer.

According to sources here, Gemina finally clinched the acquisition late Wednesday after a flurry of meetings, faxes and voting by GFT’s creditor banks over the past two days.

The new bid raises the value of the deal only by about $7 million (12 billion lire), but is structured so that the creditor banks will be completely bought out. Gemina’s initial offer called for the banks to retain a 40 percent stake in GFT.

The deal caps almost two years of tumultuous negotiations to rescue the financially troubled GFT, which produces such top names as Valentino, Giorgio Armani, Claude Montana, Emanuel Ungaro and Calvin Klein.

Reached in New York Wednesday, Valentino chief executive Giancarlo Giammetti said: “I’m very happy that a great Italian company will stay Italian. I’m sure Gemina will bring a new energy to GFT and strong support to the present management. I believe the Gemina Group will maintain the actual management, which is very good.

“GFT needs a new investment to become again very competitive in the market,” he went on. “They need the support in deliveries. Gemina can give this kind of investment.

“The funny thing is about two years ago, GFT was a beautiful woman that no one wanted, ” Giammetti said. “Now, they have too many suitors… and finally a marriage.”

A Gemina spokeswoman here, however, said she couldn’t confirm reports of the marriage. “I don’t know anything officially,” she said.

But the news drew a strong reaction from CVC, an investment group associated with banking giant Citicorp.

CVC, arguing it won approval from 51 percent of the creditor banks earlier this week and had simply asked for a grace period until its investment committee could approve the transaction next month, is threatening legal action over the deal.

“At this point, our legal advisers are saying they are evaluating their options,” a CVC spokesman said Wednesday.

The spokesman said that at the last minute one of the creditor banks, Banca Nazionale del Lavoro (BNL), reversed its vote, saying it didn’t want to be bound unconditionally to the CVC bid while waiting for the CVC investment committee decision.

CVC claimed its bid was backed by Giorgio Armani, former GFT manager Clemente Signoroni, rejected bidder Plaid Clothing Group PLC and a number of smaller Italian entrepreneurs.

According to the sources, Gemina has agreed to buy out the full amount of warrants the banks converted earlier this year for $65 million (104 billion lire), inject $38 million (60 billion lire) of fresh capital into the company and consolidate GFT’s $271 million (434 billion lire) in debts into a five-year instrument.

Furthermore, Gemina has agreed to bring in management for GFT that has the approval of the banks.

Although the amount of the offer has risen substantially during the bidding and counter-bidding, the dollar value of the deal has declined markedly over the past two weeks because of the fall of the lira’s exchange rate against the dollar.

“It’s a very high offer,” said one source familiar with the deal. “At this point, the bidding has gone way beyond reality.” Although the Gemina pact appears to put an end to a troubled episode in Italy’s fashion world, some observers here criticized the handling of the deal, saying that the banks favored Gemina for reasons that have nothing to do with an industrial strategy for GFT.

These observers also accused Mediobanca, the investment bank masterminding the GFT rescue, of favoring Gemina because the company is within its sphere of influence.

“There is no industrial plan. Gemina has a different kind of allure and that is because it is in the right circle,” said one source.


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