Foreign bankers reject Ferruzzi rescue package
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Your support makes all the difference.MILAN (Reuter) - Italy's heavily indebted Ferruzzi group yesterday launched a long-awaited multi-billion- dollar rescue plan, but hit a snag when foreign banks rejected it.
Ferruzzi, confirming heavy losses for the first half of 1993, confirmed it would ask creditor banks and shareholders for 5,400bn lire ( pounds 2.3bn) of funds to cover the losses and finance a massive restructuring programme.
Italy's second-largest private firm, the previous management of which faces accusations of 'grave irregularities', has been saved from immediate bankruptcy by winning support for the plan from its main domestic creditors.
But the success of the rescue, one of the largest financial operations launched in Italy, remains in doubt until the group can persuade foreign creditors to help, analysts said.
Foreign creditors issued a statement saying the plan was 'not acceptable' following a meeting in Milan. They gave no further details but said they were appointing a five-bank committee to represent them in continuing talks with the struggling foods-to-chemicals group.
The foreign bank committee is made up of Barclays, Credit Suisse First Boston, Citibank, Deutsche Bank and Union Bank of Switzerland.
Besides subscribing to the bulk of the huge capital rise, banks were being asked to turn a large chunk of short- term loans into long-term debt at a rate of interest only half that they usually charge top corporate customers.
Banks were also being asked to write off about L1,800bn of interest payments for 1993, although most of the burden of the waiver will fall on domestic creditors.
Leading Italian banks gave Ferruzzi the go-ahead for the plan, including the interest rate waiver, at a crisis meeting in Rome last weekend.
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