DEL MONTE Pacific Ltd., the food group of the Campos family, may issue preferred shares by year-end, proceeds of which will be used to refinance its debt to acquire US firm Del Monte Foods Inc.
A company official said Del Monte will issue preferred shares worth $360 million by December.
Del Monte Pacific earlier said it will offer up to 5.5 million shares at an indicative price of up to P22.84 per share.
The preferred share sale is part of a series of fund-raising activities the company is looking into to refinance borrowings it tapped to acquire Del Monte Foods for $1.68 billion.
“The planned ordinary share public offering will be followed by a perpetual preference-share offering and, thereafter, a rights offer. Group borrowings will then be reduced by approximately $520 million, which will significantly deleverage DMPL’s balance sheet as it pays down its short-term bridge financing,” Del Monte Pacific earlier said.
Company, dual-listed at both the main boards of the Philippine and Singapore stock exchanges, said it posted a net loss of $21.9 million (about P942 million) for its fiscal first quarter ending July, after it was forced to acquire several loans to purchase Del Monte Foods.
“These costs include higher interest expenses from a long-term loan to acquire Del Monte Foods and short-term bridge financing of Del Monte Philippines, which will be refinanced with an equity offering in the Philippines,” the company said.
Revenues grew almost fourfolds to $445.6 million from last year’s $119.4 million. This period’s revenues, however, included some $340-million sales from Del Monte Foods.
“While first quarter sales [of Del Monte Foods] decreased by 1 percent versus the prior year period, this was a marked improvement from the 17-percent decline during the transition period of February to April 2014, when sales were affected by inherited higher product pricing and changes to product labels,” said Nils Lommerin, CEO of Del Monte Foods.
“We have taken corrective measures by adjusting the price of our products to competitive levels, reintroducing the well-recognized classic label and undertaking aggressive promotional campaigns in an effort to regain market share. In the Packaged Vegetable and Tomato segments, we have stabilized market shares while in Packaged Fruit, we have improved it,” he said.