Parmalat reveals debt management plan
Romania, Hungary and Russia, has come up with a plan that will see
the many creditors offered stock.
According to a report in the Financial Times, the vast majority of Parmalat's creditors will be offered stock whose net asset value is between 2 and 11 per cent of the €14.5 billion ($18bn) in debt accumulated by the dairy group.
In response to this Parmalat Hungary, one of the groups biggest division in the region, announced this week that the Hungarian government would take over guarantee fees on loans to one of the company's suppliers, Hajde-Bet. In April the goverment provided loan extension to two of Parmalat Hungary's suppliers to the value of HUF 2.8 billion (€11.25m).
The move reflects growing confidence in the division, which has fought to get back on its feet following the revelations about the groups debt. Following this the division set about introducing austerity measures, which included the loss of 300 jobs. The measures met with success and have thus far ensured the future of the division.
The group also has operations in both Russia and Romania, where the similar plans to maintain the businesses are currently in place.
Parmalat's problems started in December last year when the company filed for bankruptcy and the firm's former chief executive Calisto Tanzi admitted having invented more than €6 billion in cash reserves and billions more in faked revenues.
Enrico Bondi, appointed by the Italian government to engineer a rescue for the insolvent and fraud-racked giant, issued the proposed debt-for-equity ratios for the 16 Parmalat subsidiaries involved in the Italian bankruptcy procedure.
Under the plan, holders of debt in Parmalat Finance Corp BV, Parmalat Netherlands, Parmalat SpA, and Parmalat Finanziaria SpA will own the assets of each of the units which are estimated to be worth between 2.3 and 11.3 per cent of each unit's total debt.
The market value of the shares will not be established until a rebaptised Parmalat, currently named Newco, begins trading on the Milan Stock Exchange, probably late this year or early next, estimated the Financial Times report.
