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Troubles at Fin.part: KPMG Cites Tension, Refuses to OK Books

Cerruti parent Fin.part got a slap this week when auditor KPMG, questioning the feasibility of its business plan, declined to certify the firm’s 2002...

MILAN — Falling.apart?

The company says no, but Fin.part, the multibrand group that owns Cerruti, got a slap in the face this week when auditing firm KPMG, questioning the feasibility of its business plan and citing "financial tension" in its books, declined to certify the company’s 2002 accounts.

Fin.part fired back, calling KPMG’s stance "absolutely unjustified," and said it reserves the right to take legal action.

Founded in 1996 by Gianluigi Facchini, now its chairman, Fin.part went on an acquisitions binge, amassing a stable of brands such as Cerruti, Maska and home linens group Frette. The company also bought Pepper Industries, Henry Cottons, Moncler and Marina Yachting — all sportswear labels — as well as the footwear firm, Andrea Pfister.

But most of that binge came during the fashion group craze of the late Nineties through 2001, when feverish corporate brand-buying led to a sky-high seller’s market, and as a result, Fin.part, among others, amassed crippling levels of debt.

Facchini, meanwhile, contends that Fin.part has accumulated less than $432 million in debt to this point and that his banks are willing to invest more to recapitalize the company. Fin.part’s 2002 consolidated sales came to $494.6 million. Dollar figures have been converted from the euro at current exchange.

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. The auditor said it couldn’t verify whether Fin.part had the "base conditions" needed to continue operating. Fin.part has a large bill coming due in July 2004 when $216 million of Cerruti bonds expire.

Fin.part responded by saying that KPMG didn’t consider pertinent information including a guarantee for $48.6 million from its bankers or that the company is concluding the process of selling assets and finding new investors.

"The auditors interpreted their mandate in too restrictive a manner," Facchini told WWD, adding that the firm will provide KPMG with more information in the coming days in hopes of a new verdict. He noted that the group’s banks approve of the strategic plan and are willing to give Fin.part another $108 million this year to recapitalize.
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