Hedge funds see long-term value in the Italian dairy giant Parmalat that they and other creditors will control after a €12 billion rescue the company is set to approve.
Hedge fund managers say they are betting on future growth at the slimmed-down milk group and on the prospect of bumper dividends - if Parmalat is successful in its $10 billion litigation claims.
"A lot of Parmalat debt has been traded. People in there now are in for the long term," one hedge fund bondholder said.
The food group, which filed for bankruptcy 14 months ago, is set over the next 10 days to back the terms of a plan to exchange €12 billion of debt for shares, handing ownership of the new company to its creditors.
Half the total debt - three-quarters of Parmalat's €8 billion of bond debt - is owned by US and European distressed debt investors, according to their advisers.
The food group's €14 billion collapse attracted such investors, who look for creditors abandoning at massive discounts their debt holdings in troubled companies.