Parmalat prepares to ask banks for more money

Parmalat's rescue managers prepared yesterday to ask creditor banks for new loans to keep its factories running, as prosecutors broaden a multi-billion euro fraud probe to examine the role of financial institutions.

One week after the arrest of Parmalat founder Calisto Tanzi, investigators are striving to unravel a complex web of shell companies, offshore units and loans used by the now insolvent food and dairy group to mask its crumbling finances.

Turnaround expert Enrico Bondi, who took over at Parmalat in mid-December just as the group's troubles exploded into an international scandal, will kick off a series of meetings with bankers today.

He is expected to ask Parmalat's main banks, including Capitalia, Intesa and San Paolo IMI, for €50 million to €100 million to pay wages and suppliers, Italian media reported.

That would be well above the loan of roughly €25 million that banks granted Parmalat in December to avoid default on an outstanding bond. The three banks' exposure to Parmalat debt already exceeds one billion euros.

At the start of the third week of what US regulators have called one of the world's most brazen corporate fraud scandals, the spotlight has also turned on big international banks.

Magistrates in Parma, Parmalat's base, today start a fresh round of questioning with the interrogation of Fausto Tonna, a former chief financial officer believed by magistrates to have camouflaged huge losses.

Judicial sources have said a report on Parmalat's finances by outside auditors PriceWaterhouseCoopers could be used in the questioning of Mr Tonna, one of Mr Tanzi's closest associates.

Mr Tonna is one of six Parmalat executives, including founder Mr Tanzi, and two outside auditors arrested over the collapse of the food group. No one has been charged in the case.

A ninth arrest warrant has been issued for the chairman of Parmalat's Venezuelan operations and head of offshore unit Bonlat.

Although still at large and said by his lawyer to be in Venezuala, Giovanni Bonici told business newspaper Il Sole 24 Ore that he was ready to return to face questioning.

"I confirm my willingness to return to Italy," he was quoted yesterday as saying.

Later this week Mr Tanzi's daughter Francesca, head of the family's Parmatour tourism group, is also due to be questioned.

Parmatour, deep in debt, is now in talks to sell operations including holiday villages and tour operators to Sviluppo Italia, a government development agency.

Tanzi has offered to turn over his shares in the group as well his personal assets - including yachts - but Parmalat's new management team on Saturday rejected the offer outright.

Parmalat's crisis exploded just over two weeks ago when its its new managers revealed a four-billion euro hole in its accounts, forcing the company to seek protection from creditors.

The collapse of one of Italy's best known brand names has prompted a war of words between the government, the Bank of Italy and regulators over who was to blame.