Banks Secure Australian Operations of Parmalat

Parmalat Australia has negotiated new financing deals with three Australian banks - ANZ, Commonwealth Bank, and National Australia Bank - granting them fixed and floating charges over the company's assets. The new arrangements effectively ring-fence Parmalat Australia's profitable operations, protecting them from creditors of the Italian parent company, Parmalat Finanziaria, which is undergoing restructuring. The deals were signed just 24 hours before a judge in Chile ordered external administrators to take charge of Parmalat's Chilean operations, but they coincided with the administrator, Enrico Bondi, winning a new loan deal for the parent company.

Key Takeaways:

• The new financing deals grant ANZ, Commonwealth Bank, and National Australia Bank fixed and floating charges over Parmalat Australia's assets, effectively ring-fencing the company's profitable operations from creditors of the Italian parent.
• The deals were signed on March 2, with the three Australian banks agreeing to provide financing to Parmalat Australia.
• The Australian facilities were negotiated over the past six weeks and were finalised after gaining approval from Parmalat Finanziaria's administrator, Enrico Bondi.
• The financing will help keep dairy production running at Parmalat's head group while it is restructured.
• Parmalat Australia managing director David Lord stated that the bank facilities "underpin the soundness and strong cash flows of the Australian operations".
• Parmalat Australia's brands, including Pauls milks and ice-creams, Rev, PhysiCAL and Skinny Milk, Vaalia yoghurts and Soy Life, are reported to be in a strong market position.
• Parmalat collapsed in December owing creditors at least A 14.3 billion, or eight times the A 1.8 billion of liabilities that its officers declared in September.
• The Italian Government is investigating allegations of extensive corporate fraud and reports suggest prosecutors in Milan are preparing indictments against Parmalat founders and executives.

Statistics:

• Parmalat Australia's assets will be secured by fixed and floating charges granted to ANZ, Commonwealth Bank, and National Australia Bank.
• The financing deals were negotiated over six weeks and were finalised after approval from Enrico Bondi, administrator of Parmalat Finanziaria.
• Parmalat Australia's creditors are owed at least A 14.3 billion, or eight times the A 1.8 billion of liabilities declared by the company's officers in September.
• 20 creditor banks have agreed to advance A106 million ($A173 million) to the company, partly as an overdraft and partly secured against the group's receivables.

Sources:

• Documents lodged with the Australian Securities and Investments Commission last week.
• Statement from Parmalat Australia managing director David Lord.
• Reports in The Australian newspaper.
• Reuters news agency.