Parmalat, the Italian dairy group, has issued a statement in response to growing rumours in the press that the company was in financial trouble.
"The group continues to enjoy the economic and financial solidity as demonstrated by the last results published last September 2002," the statement read. "In this context, we have not registered any deterioration of the conditions compared with what we announced to the market."
The statement went on to add that Parmalat's 2002 results will be published at the end of next month and that they would "confirm the positive trends of the group registered in practically all countries in which the company operates".
"The first months of 2003 are showing volumes and margins higher than the company's expectations," it added. "The current net financial position of the group is an improvement compared to that published on 30 September 2002 and equal to €1.956 billion."
Parmalat's share price has plummeted by more than 25 per cent over the last few days, mainly due to concerns about the company's latest €500 million bond issue.
"The bond issue announced to the market is motivated by the intention to tap the institutional investors market - following an intense communication activity with the major European institutional investors over the last month - and will be finalised if its conditions are judged satisfactory by the company," Parmalat said.
However, the market speculation prompted by the proposed bond issue has caused Parmalat to change its mind. "Parmalat has decided not to go ahead with the proposed bond issue having given due consideration to the terms and conditions at which such transaction would have been closed in changed market environment," the company said.
"Such a decision has been taken as the group does not have any immediate need for funds and despite the more than satisfactory demand coming from institutional investors, to whom this transaction, for the first time, was solely dedicated. The aforesaid determination has been reached in consideration of the final cost, the cited conditions in both the debt and stock markets as well as various speculations which do not reflect the fundamental credit strength of the group."
Parmalat said it was also considering taking legal action against the source of the "false information on the solidity and credibility of the group and its representatives".