Parmalat USA Corp files for bankruptcy
Feb 25, 2004 12:00 PM, from staff and wire reports
Parmalat USA Corp, the Wallington NJ-based subsidiary of ParmalatFinanziaria, has filed for Chapter 11 reorganization, though the unit plans to maintain normal operations. The company said it is considering the sale of its United States dairy business, among other possible actions.
In December 2003, an audit of Italy-based ParmalatFinanziaria indicated serious accounting irregularities and roughly $18 billion in debt. This caused Parmalat USA to be late on payments to some of its dairy farmers. A few farmers began selling milk to other firms, but the company has signed more suppliers since then.
GE Capital Corp has tentatively provided Parmalat USA $35 million in short-term financing. According to the bankruptcy filing, Parmalat USA has assets and debts of at least $100 million each. These include bank loans of about $5 million each owed to BancaDi Roma Italy and Banca Intesta SpA, and a $10 million bank loan owed to Comerica of Detroit MI.
With about 1,300 employees in the United States, Parmalat USA operates milk production plants in Wallington, Atlanta GA, Decatur AL, Brooklyn NY, and Grand Rapids MI. The US operation consists of two subsidiaries: Farmland Dairies LLC in Wallington and Milk Products of Alabama LLC.
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