Del Monte Pacific raises $665 M to fund acquisition of US firm

MANILA, Philippines - Del Monte Pacific Ltd. (DMPL), controlled by the Campos family, will raise as much as $665 million to partially fund the acquisition of the consumer food business of US-based Del Monte Foods (DMF).

In a regulatory filing, DMPL said its board of directors approved loan deals with two of the Philippines’ largest banks and the plan to sell shares to strategic investors.

Specifically, DMPL signed a bridge loan facility agreement with BDO Unibank Inc. for up to $350 million and a term loan facility deal with Bank of the Philippine Islands (BPI) for up to $165 million that will be guaranteed by parent firm NutriAsia Pacific Ltd.

In October, DMPL announced its acquisition of the consumer food business of DMF for $1.675 billion. The move will give DMPL access to the profitable US and South American markets while boosting its net sales by around $1.8 billion.

DMPL, led by condiments king Joselito D. Campos Jr., will also raise $150 million through a share placement.

“The company is in discussions with strategic investors to finalize the terms of an equity investment into the group,” DMPL said.

“The investment amount will be about $74.5 million and it will be used to partially fund the proposed acquisition,” DMPL said, adding that the remaining $75.5 million will be secured through a share sale or a medium-term loan, or a combination of both.

In January to September last year, DMPL posted a net income of $17.8 million, down five percent from a year ago due to non-recurring expenses such as transaction fees and dual listing in the Philippine Stock Exchange in June.

 â€œAdding these back, net profit for nine months would have been $20.7 million, or up 11 percent,” DMPL said.

In the nine-month period, sales climbed 12 percent to $335.4 million from $300.2 million due to higher volume and better sales mix.

DMPL earlier said it will continue pursuing the sale of higher margin, value-added products as it implements operational efficiencies, procurement savings and active cost management.

DMPL’s 23,000-hectare plantation in Mindanao is the world’s largest fully integrated pineapple operation with a 750,000-metric ton processing capacity. It was set up in 1926 by the US government because of the then widespread pineapple disease in Hawaii.

DMPL produces, markets and distributes food, beverages, and related products in the Asia-Pacific region and the Indian subcontinent, and has supply deals with trademark owners and licensees around the world.

Its principal shareholder, NutriAsia, leads the Philippine market for condiments (Datu Puti and UFC), specialty sauces (Jufran and MangTomas) and cooking oil (Golden Fiesta).