Parmalat's Canadian unit completes C$610 million refinancing

By Jeff Pines

Washington, July 12 - Parmalat Finanziaria SpA said its Canadian unit, Parmalat Dairy & Bakery Inc. completed a C$610 million refinancing.

The money came from the Ontario Teachers' Pension Plan Board, which enabled the company to repay $285 million and C$23 million of senior notes. Parmalat used C$550 million to repay debt. The balance will be used for general business and operating purposes.

The Canadian unit obtained two term facilities for C$530 million, which mature in three years and are secured by all of Parmalat Canada's assets. In addition, the facilities include a two-year C$80 million revolver that can be extended for a year. The revolver is secured by the receivables and inventory of Parmalat Canada. The teachers' pension plan board is underwriting the revolver. An unnamed major Canadian bank will provide the cash, Parmalat said.

The facilities can be repaid early, but with a prepayment penalty. If Parmalat Dairy sells any of its assets, or undergoes a change in control it will be required to make a prepayment to the board.

The terms of the prepayment of the senior notes requires about C$420 million in cash and C$71 million of new 7% senior subordinated notes to the senior note holders. Interest will be paid either in kind at 7% or at 5% annually in cash. A cash interest payment is prohibited during the term of the Ontario Teachers' Pension Plan Board credit facilities.

The new notes mature in June 2010 and June 2012.

Parmalat Finanziaria filed for bankruptcy on Dec. 24.

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