Talks to save Parmalat continued feverishly today as concern grew that a hole in the accounts of the global food group could be even bigger than feared, adding to a scandal that has been dubbed Europe's Enron.
As an emergency management team rushed to find some form of protection from creditors, leading newspaper Corriere della Sera quoted Parmalat's former chairman as saying the group had not bought back €2.9 billion ($3.58 billion) of bonds as detailed on its books.
That would push its total debt to almost €9 billion, up from the €6 billion on its September 30th balance sheet.
Parmalat was not immediately available for comment. On Friday, Parmalat dropped a bombshell by announcing that a document showing €3.95 billion held by a Cayman Islands unit had been declared false by Bank of America.
The news slashed its already battered shares and bonds to less than a third of their face value.
Investors had been attracted to Parmalat by its steady cash flow from selling milk and biscuits but had long been worried that its complex financial investments could leave it short of cash.
That nightmare came true this month when it failed to pay back a €150-million bond on time despite having €4.2 billion of liquidity on its books.
Without citing sources, Corriere said US investment group Blackstone Capital Partners had met Parmalat's former head Mr Calisto Tanzi on December 9th to propose a buyout but walked away when Tanzi revealed the state of Parmalat's accounts.
Other papers speculated more holes could come to light. Yesterday, prosecutors launched an investigation into Parmalat and took boxes of documents from its auditors Grant Thornton and Deloitte & Touche. Charges could include fraud and providing false information to auditors, judicial sources said.