Parmalat dispels assets
in an effort to swap debt for equity. The company which is one of
Italy's most global companies announced on Friday its restructuring
plan designed to keep the group afloat, writes Danny
The group plans to back out of major subsidiaries in the US, Latin American, Asia, Canada and Australia. The move will mean that the financially hit group will be able to draw a new focus on the Italian side of the businesses.
Enrico Bondi, the turnaround expert appointed by the Italian government, told 30 banks and 20 bond holder groups that it was necessary for the group to sell these assets in order to survive.
It was expected that a post scandal hit Paramalat would need to focus more on the Italian aspects of its business. The group's worldwide workforce once the plans are implemented will be axed from 32,000 to 17,000.
It is likely that actual restructuring will not start until August or September next year despite previous speculation implying that it would begin earlier in June. Bondi has said that he will leave the company once the restructuring plan has been implemented.
However, it has been reported that legal problems may delay some of the transactions. For example the company's Brazilain arm, Parmalat Brasil Indusria de Alimentos, was placed under court control earlier in the year. Company executives are evaluating their options.
Major players may be interested in buying assets from the fallen giant, for example, Colanta the South American company may be interested in setting up new powdered milk plant in South America from the Italian company.
Legal agreements and conditions will need to be set up before competitors will be able to purchase some of the company's foreign assets.