Parmalat gets final OK on supplemental financing

By Jeff Pines

Washington, Jan. 6 - Parmalat USA Corp. obtained final approval for access to $15 million in letters of credit. The order was filed with the U.S. Bankruptcy Court for the Southern District of New York Thursday.

General Electric Capital Corp., its debtor-in-possession financing agent, will provide the financing, and Parmalat will pay it a $237,500 fee for the supplemental financing.

Cash-starved Parmalat said it needed the extra letters of credit to give to state milk boards so they would release its cash deposits. At the time of its request, the company was also negotiating with American International Group Inc. to release its $4.5 million cash deposit securing deductibles on workman's compensation and auto insurance policies in exchange for a letter of credit.

The order requires Parmalat to get GE's approval before issuing any letters of credit to anyone other than a milk board.

Parmalat filed for bankruptcy on Feb. 24, 2004. Its Chapter 11 case number is 04-11139.

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