THE Campos-led Del Monte Pacific Ltd. said it will use proceeds of its rights issuance to pay off its debt from the Bank of the Philippine Islands (BPI).
The company said it plans to raise $180 million from the Philippines and Singapore by selling up to 641.9 million shares. Its board will mandate how many shares it will sell to the public that will be priced at a discount of between 20 percent and 25 percent.
Shares of Del Monte were down on Tuesday’s trade at P14.96 apiece.
The company appointed DBS Bank as lead manager and underwriter for the Singapore rights issue and BPI Capital Corp. for the Philippine issuance.
“The company intends to utilize the net proceeds of the rights issue to repay the bridging facility of $165 million from the Bank of the Philippine Islands that the company had obtained to partially finance the acquisition of the consumer food business completed on February 19. The rights issue will allow the company to de-leverage and strengthen its balance sheet,” Del Monte said.
A rights issuance gives current shareholders to purchase additional shares from the company in proportion to their existing holdings, within a fixed time period.
At the moment, NutriAsia Pacific Ltd. holds some 66.76 percent of Del Monte, or an aggregate interest of 869.31 million shares, Lee Foundation owns some 7.71 percent and Lee Pineapple Co. Ltd. owns 8.21 percent.
NutriAsia has signified it will subscribe for its pro-rata entitlements for the rights issue.
The company said it will submit an application for the said offering to the stock-exchange authorities in Singapore and in the Philippines and also with the Securities and Exchange Commission.
Del Monte earlier said it turned in a profit of a mere $200,000 for its fiscal second quarter ending October from last year’s $8.9 million in income, mostly as a result of its huge acquisition cost of US firm Del Monte Foods.
Revenues ballooned to $548 million, 80 percent of which already came in from the US firm, from last year’s $136.3 million.
Stripping out the income of US-based Del Monte Foods, its revenues for the period would have been only at $128.5 million, or less than the previous year, while net profit would have been at $10.4 million.
Americas now consists of 80 percent of Del Monte’s turnover, followed by 19 percent from Asia Pacific and only 1 percent from Europe after the lower sales of pineapple-juice concentrate due to the intentional shifting out of unbranded juice.
The company said it will continue to shore up cash to pay up its huge debts, which by April next year, would have been reduced to about $1.25 billion to $1.3 billion in net debt from October’s $2 billion.
“We are committed to significantly deleverage DMPL’s balance sheet by reducing debt in the next quarter through an international perpetual preference share offering followed by a rights issue which are expected to raise $515 million,” said Joselito Campos Jr., the company’s CEO and managing director.