Parmalat sues BofA
Byline: Heather O’Brian in Milan
Bankrupt Italian dairy group Parmalat Finanziaria SpA said Thursday, Oct. 7. its government-appointed administrator, Enrico Bondi, filed suit for damages against Bank of America Corp. in a North Carolina court.
The move is part of a continuing drive to recover money from third parties Bondi says played a role in the company’s collapse late last year.
Parmalat did not provide details of the suit against Charlotte, N.C.-based BofA, but it hopes its overall drive for damages will generate at least $10 billion.
A person familiar with the situation said the suit in North Carolina contends Bank of America was aware Parmalat was in financial difficulty. It accuses BofA of profiting from that knowledge by undertaking transactions and earning fees while ensuring the bank itself had little or no risk.
A Bank of America spokeswoman said the company had not yet received a copy of the filing.
“However, we believe the facts do not support a lawsuit against Bank of America, and we will vigorously defend ourselves,” said the official, Betsy Weinberger.
Parmalat has already filed separate suits in U.S. courts against Citigroup Inc., Deloitte & Touche LLP and Grant Thornton International.
Separately, it has also brought suit in a court in Parma, Italy, against Credit Suisse First Boston, Deutsche Bank AG and UBS AG over specific transactions the financial institutions handled in the run-up to Parmalat’s insolvency.
Any proceeds from so-called clawbacks and other legal actions undertaken by Bondi will be used to sweeten the dividend pot for future Parmalat shareholders, the dairy group has promised, pledging to pay out 50% of distributable profits to new shareholders over the next 15 years. Later this year creditors will be asked to approve terms of a debt-equity swap that would see them become shareholders in a new and reorganized Parmalat.
On Wednesday, Italian lender Banca Intesa SpA proposed paying [Euro]160 million ($196.4 million) to settle a controversy over transactions involving a Parmalat bond issued in the summer of 2003.
Meanwhile, Parmalat Africa Ltd. and Parmalat South Africa (Pty.) Ltd. disclosed Thursday they have refinanced $26 million in debt owed to Bank of America.
The two divisions said they used a South African-based investment bank as a financier, but they declined to identify the bank. A Parmalat Africa official reached by cell phone in Capetown refused to comment.
Parmalat Africa covers Mozambique, South Africa, Swaziland and Zambia.
COMPANY: Parmalat Finanziaria SpA
COMPANY: Bank of America Corp.
COMPANY: Citigroup Inc.
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