DEL MONTE Pacific Ltd. is selling the shares of its Philippine unit Del Monte Philippines, Inc. (DMPI) to a Singapore-based investor for $130 million, it told the stock exchange on Monday.
In a disclosure, the canned fruits manufacturer said its indirect wholly owned subsidiaries DMPI and Central American Resources, Inc. had entered an agreement with Singapore’s SEA Diner Holdings Pte. Ltd. to dispose of the 363,651,600 existing ordinary shares of DMPI.
The total shares represent 13% of DMPI’s total issued and paid-up ordinary shares.
“Subject to the terms and conditions of the agreement including the fulfilment of certain conditions precedent, the company will sell to the investor, and the investor will acquire from the company, the DMPI Sale Shares,” it said.
The consideration for the transaction is $130 million (approximately P6.6 billion), based on the price earnings multiple ratio of about 15.7 times DMPI’s earnings in its fiscal year ending April 30, 2019.
The listed parent said the investor, SEA Diner, wants to focus on investments in food products, especially those that have a large market in China. SEA Diner has so far invested more than $1 billion in consumer businesses across the ASEAN and China to date, Del Monte said.
Aside from manufacturing canned fruits, Del Monte also produces juice drinks, tomato sauce, spaghetti sauce and culinary mixes.
For Del Monte’s part, it said the sale will help it generate additional funding for its capital restructuring plans, given that DMPI’s previous plan to do a public offer in the country remains hazy amid “volatile market conditions that show no signs of improving.”
“As the proposed public offering was deferred, the group was unable to make prepayment/repayment of certain loan facility/ies to reduce the group’s debt to the extent planned,” it said.
“In addition, the funds raised from the proposed sale will also allow the company to free up certain credit lines so as to pursue other opportunities that the company may have,” it added.
Once the transaction is through, the company expects proceeds amounting to S$155.5 million (approximately P5.83 billion), which it will use to pay outstanding loans such as to local bank Rizal Commercial Banking Corp.
In its six-month fiscal period ending October 2019, the company swung to an attributable net loss of $75.62 million from attributable earnings of $11.45 million in the previous year, pulled by one-off expenses from shutting down some of its United States facilities.
Shares in Del Monte at the stock exchange ended flat on Monday at P5 apiece. — Denise A. Valdez