MILAN — Plaid Clothing Group has asked GFT SpA’s Italian creditor banks to extend its exclusive status as sole bidder for GFT beyond the original May 15 deadline, according to sources familiar with the talks.
The banks reportedly agreed to the extension but on the condition that Plaid agree to delete the “price adjustment” clause in the letter of intent that allows Plaid to modify the offer price after completing due diligence.
How this condition will affect the talks remains to be seen.
“Now Plaid has to give its answer,” said one banking source who was at the meeting. A financial source close to Plaid, however, expressed surprise at the condition, noting that this would be tantamount to forcing Plaid to commit to a price without knowing what it was buying.
The sources said Plaid officials met last week with the banks at the Milan headquarters of merchant bank Mediobanca, which is coordinating GFT’s financial rescue, and asked for a month beyond the deadline to sign a preliminary agreement to buy control of GFT.
One source said the extension was to accommodate the time needed for all of the Italian banks exposed to GFT to approve the preliminary agreement. There are more than 20 of these banks. As reported, 95 percent of the creditor banks gave the green light last week to Plaid’s letter of intent, but, the source said, it will take longer than expected for all the banks to ratify the actual preliminary offer.
The source said the extension is not connected to any problems on Plaid’s part in arranging financing. There has been some speculation that Plaid was having difficulties in getting financing.
Plaid has offered $252 million (400 billion lire) to buy GFT in exchange for an agreement by GFT’s Italian creditor banks to write off some 40 percent of GFT’s debts.
Plaid officials could not be reached.
The sources confirmed that Plaid is still conducting diligence on GFT and is working on financing for the bid, with a number of options being considered.