FIAT SPRINTS TO FRONT IN THE RACE FOR GFT WITH $384 MILLION BID

MILAN — After months of denying it had any interest in GFT SpA, the Fiat investment group Gemina SpA has launched what appears to be a winning bid for the designer label giant.
A Gemina spokeswoman confirmed the offer Monday, but declined to release any details about how it is structured.
Financial sources here, however, placed the Gemina bid at the equivalent of nearly $384 million (588 billion lire), far more than the
$276 million cash bid by the Plaid Clothing Group that was apparently rejected by GFT’s creditor banks.
But the Gemina bid involves little cash, and is being interpreted in financial circles here as an “inside deal” engineered by the merchant bank Mediobanca. Mediobanca officials weren’t available for comment.
The bid has already won the approval of all but two of GFT’s creditor banks, according to financial sources.
“All the banks are in favor of it except the two Turin banks [Instituto Bancario San Paolo di Torino and Cassa di Risparmio di Torino], and that may just be a face-saving ploy for Mediobanca to make it look less like it was an inside deal,” said one banking source.
“What deal could be more inside than this?” he added.
According to sources, the deal calls for Gemina to inject $52 million (81 billion lire) in GFT through a capital increase. The creditor banks would write off the $57 million (90 billion lire) in GFT options that they converted earlier this year, but would ultimately get a 40 percent stake in GFT.
The offer further calls for GFT’s $278 million (434 billion lire) in debts to be consolidated as is, with repayment over five years at an interest rate below the current interbank rate. Of the total debt, some $64 million (100 billion) might be refinanced through a convertible bond issue, the sources said.
Sources added that GFT chairman Marco Rivetti, whose family founded GFT and who holds options for 10 percent of the firm, would be repaid through the operation and ultimately end up with a diluted stake of around 6 percent. Rivetti wasn’t available for comment.
Although Gemina executives were known not to favor a GFT acquisition on an industrial/investment basis, sources said that the deal “is a move by Mediobanca to keep this company within its sphere ofinfluence. Mediobanca pushed Gemina to make this offer.” It wasn’t clear Monday what plans Gemina might have for top management at GFT, although within trade circles there was speculation that Rivetti might return to an operative position. It also wasn’t clear what the timetable might be for the banks to approve the Gemina offer.
It is widely expected here that rival bidders Plaid Clothing, Texas Pacific Group and CVC Capital Partners will now abandon their offers, despite a reported move by CVC Monday to raise its bid to $314 million (490 billion lire) from $307 million (480 billion).
CVC officials couldn’t be reached for comment. A source close to the deal said it was unlikely Plaid would pursue the acquisition any further.

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