UPDATE:Supplier Group Backs Bid For All Of IT Holding-Source
February 12 2010 - 7:57AM
Dow Jones News
A group of suppliers owed a total of EUR200 million by bankrupt
Italian fashion group IT Holding SpA now wants to spearhead an
acquisition and revival of the group, and hopes to file an offer by
the end of the month, a person familiar with the situation said
Friday.
Athena Consorzio, a newly-created consortium set up by the
suppliers who represent almost a third of IT Holding's debt, will
be ready to present an offer to take the company out of bankruptcy
as soon as court-appointed administrators provide updated financial
information, the person said.
Athena wants to set up a vehicle, capitalized by allied
financial investors, to buy the whole group, which includes the
Ferre label and Malo cashmere brand, which otherwise are slated to
be auctioned off individually, the person said.
Court-appointed administrators are already looking for buyers of
IT Holding assets, and last month said they would sell the group's
brands on a one-by-one basis.
But Athena's plan may trump that approach, especially as it
keeps more jobs and will likely be viewed favorably by the
government, the person said.
IT Holding administrators, who are being advised by Mediobanca
SpA (MB.MI) and Milan boutique firm Sin&rgetica, are due to
meet Industry Minister Claudio Scajola on Monday to report on their
plans to restructure the company. An updated report on the
company's assets and liabilities should be released as early as
next week.
Given uncertainty about such things as the true value of unsold
cashmere jerseys in warehouses, it will then take Athena--which is
being advised by General Electric Co.' (GE) Interbanca corporate
banking unit--a few days to define its own bid.
The equity bid will likely be between EUR50 million and EUR120
million, the person said.
The cash would come from a financial partner, of whom there were
many interested candidates. "I don't have to knock hard on doors,"
the person said, adding there were at least 10 serious candidates,
some of which have well-known apparel brands of their own.
Key to the bid is that the suppliers, whose EUR200 million in
combined credits stem largely from unpaid bills, would be able to
provide working capital to the revived IT Holding at better terms
than a bank loan, in part by loosening payment schedules, the
person said.
The idea of a supplier-led buyout resembles a management buyout,
and could set a precedent in an economy such as Italy's, where most
companies are small.
"The supplier firms obviously have an extra interest in
resolving their lost credits as their own survival depends on what
happens to the company," the person said.
Other IT Holding creditors include investors with around EUR300
million in bonds and Italian banks with around EUR100 million.
Given the scale of job losses during the current recession and
persistent pressure on Italy's sprawling textile sector--which
generates almost one million jobs in the country--politicians will
likely favor any deal that tries to keep operations local.
The governor of Molise, the region where IT Holding is
headquartered, said on a local television network last month that
his administration would consider injecting equity into any project
that kept the company as a going concern.
"We have a dialogue with all the decision makers" controlling IT
Holding's destiny, the person said. "There's a high possibility for
us" to prevail and keep the company together if the administrators'
valuation "is in line with what we think," the person added.
-By Christopher Emsden, Dow Jones Newswires; +39 06 69766921;
chris.emsden@dowjones.com
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