Parmalat shares rise on market return

07 Oct, 2005

Parmalat shares returned to the market on Thursday two years after the Italian food group's collapse, with suitors lining up and traders betting on a windfall from multi-billion-euro lawsuits.
At 1022 GMT the shares were trading at 3.131 euros on the Milan stock exchange - over three times their nominal value, but just below the 3.15 euro reference price set by the bourse on the basis of pre-market levels.
At current levels, Parmalat has a market value of 5 billion euros ($6.03 billion), almost three times its capitalisation before the crisis broke in December 2003.
"It opened at a high level - yesterday, it was trading on the grey market at 2.90 euros," one Milan trader said.
The nominal value of Parmalat's 1.6 billion shares had been set at 1 euro, with one share for every euro of recovered debt. Over 10 percent of those shares had changed hands by 1000 GMT.
"I had expected more interest on the first day of trade," said one Italian fund manager who declined to be named.
"I imagine the coming days will give a better indication of where the stock will go and what real interest is."
Many investors are betting suits filed by Parmalat's bankruptcy administrators will result in hefty dividends, helping to bolster the value of its shares.
Since its December 2003 slide into insolvency Parmalat has launched lawsuits claiming 13.1 billion euros ($15.7 billion) in damages from former financial partners, many of them now shareholders after a debt-for-equity swap.
Parmalat has also filed claims for 7.46 billion euros from banks that arranged deals in the months preceding its collapse.
Parmalat was once one of Italy's best-known global brands, active in over 30 countries from Australia to Venezuela.
Put under emergency administration after its founding managers were arrested in December 2003, it has since slashed its loss-making units but is still a leading milk producer.
"The firm deserves confidence and the opportunity to move forward independently, on its own legs," administrator Enrico Bondi said at the Milan exchange. "It could become a focus for tie-ups when it is able to exercise its full potential."
Suitors for Parmalat are already lining up. Italy's top fresh milk producer Granarolo on Tuesday became the first to say openly it was considering an offer for its larger rival. It is supported by Italy's agriculture minister and other politicians who favour an "Italian solution" for Parmalat as the country enters a general election year.

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