Del Monte raising $600 million through private placement

MANILA, Philippines — Singapore and Philippine-listed Del Monte Pacific Ltd. (DMPL) intends to raise as much as $600 million through a private placement aimed at addressing capital deficit following the deconsolidation of its US business.

DMPL said the company’s management is looking at an equity raise through private placement at Del Monte Philippines Inc. (DMPI).

The size of the offering will be announced by the company, but the estimated amount of funds to be raised from the share placement is eyed between $500 million and $600 million.

A share dilution is expected as part of the planned equity raise, but DMPL is expected to maintain a controlling interest in DMPI.

The equity raise through private placement at DMPI “aims to reduce the group’s leverage and address the capital deficit resulting from the recent impairments relating to the US business.”

DMPL’s management expects the equity raise to help unlock value and enhance the group’s overall valuation.

DMPL said that DMPI’s balance sheet has the capacity to support the proposed capital raise, which is seen helping reduce financing costs, replacing higher-interest debt with equity that carries a lower dividend yield.

The company also said that considering the overall market sentiment in the Philippines and the group’s current position, an initial public offering is not a viable option at this stage and it is instead looking at private placement as the fastest way to raise equity at present.

US subsidiary Del Monte Foods Holdings Ltd. and certain subsidiaries have commenced voluntary Chapter 11 proceedings in the US Bankruptcy Court for the District of New Jersey on July 1.

DMPL said the US business had been deconsolidated and its results presented as discontinued operations.

It said that the move ensures that uncertainties in the US operations do not affect the company’s continuing core businesses.