Del Monte mulls over $600-M share offer

Del Monte Pacific Ltd. (DMPL) is planning to raise up to $600 million from the issuance of new shares in its Philippine business to address a shortage of capital related to its loss-making American unit.

In a regulatory filing on Tuesday, the Campos-led company said it was considering an equity raise through private placement at Del Monte Philippines Inc.

While it has yet to announce the final size of the offering, it is looking at raising between $500 million and $600 million from the share sale.

A private placement refers to the sale of securities to select investors, including institutional investors, instead of the general public.

DMPL’s planned equity raising is seen to help “reduce the group’s leverage and address the capital deficit resulting from the recent impairments relating to the US business,” the company said in the published minutes of its annual general meeting.

DMPL currently has around $1.3 billion in debt, raising concerns that its equity has been “substantially eroded.”

The firm also noted that share dilution would be expected as part of the planned equity raise, but DMPL would remain the majority shareholder in Del Monte Philippines.

DMPL said it had already evaluated “all available options” to address its capital deficit and recapitalize its business.

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DMPL is likewise considering disposing of some of its assets to reduce debt, and engaging its bankers to “explore options relating to the group’s various loans.”

“These lender banks have been collaborative and the management team is working closely with them on the matter,” it said.

DMPL has long been posting losses because of its US subsidiary, Del Monte Foods Holdings Ltd., which has already put up its assets for sale.

However, DMPL auditor Ernst & Young said it was not able to get enough evidence to review the “appropriateness” of DMPL’s share in Del Monte Foods’ losses.