Buyers gobble up Del Monte share sale

MANILA, Philippines - Investors gobbled up Del Monte Pacific Ltd.’s (DMPL) dollar share sale, the country’s first dollar-denominated preferred shares offering.

In a disclosure on Friday, DMPL said the offering which ended on March 28 “was oversubscribed by more than 33 percent with a total volume of 20 million Series A-1 Preference Shares which were sold at the offer price of $10 per share, generating a total amount of $200 million.”

The company tapped BDO Capital and Investment Corp., China Bank Capital Corp., PNB Capital and Investment Corp. and RCBC Capital Corp. as joint lead underwriters. BDO Capital also acted as sole issue manager.

DMPL will issue and list the shares on April 7.

The initial tranche is part of DMPL’s debt program of up to $360 million, registered under the Securities and Exchange Commission’s shelf registration facility.

The Campos family-led company intends to use the proceeds it receives from the offer to refinance the bridge loan facility extended by BDO Unibank amounting to $350 million which partially financed the acquisition of the DMFI Consumer Food Business.

Moving forward, the company is targeting to boost sales outside the US as it expands its market.

At present, the US accounts for 80 percent of DMPL’s earnings while Asia and the rest account for 20 percent.

In five years, the plan is to bring the US sales to 60 percent while others will have a bigger share of 40 percent, officials said.

On the US business, DMPL chief financial officer Parag Sachdeva said in a recent briefing the company is likely to benefit from from US president Donald Trump’s America first policy, which could reduce imports that threaten DMPL’s US unit.

The company sees a recovery of its US business in two to three years or in 2019 to 2020.

As part of efforts to boost the US market, DMPL would be introducing more healthy products in the US given the saturation of the canned market to help in the business recovery and increase its presence in supermarkets and groceries.

In all, the company expects to generate higher recurring profit in fiscal year 2017 ending April, with Asia seen as a major growth area.

DMPL is allotting $70 million in capital expenditures for fiscal year 2017 and about the same level for fiscal year 2018. This is higher than the $50 million set aside in the prior year.

Capex will focus equally for Asian side and the US business.