By Revin Mikhael D. Ochave, Reporter
CAMPOS-LED Del Monte Pacific Ltd. (DMPL) said its United States subsidiary Del Monte Foods Holdings Ltd. (DMFHL) has filed for Chapter 11 bankruptcy and is in search of buyers for its assets.
DMFHL and certain subsidiaries began voluntary Chapter 11 proceedings within the bankruptcy court for the District of Latest Jersey on July 1, granting access to $912.5 million in financing to support their operations, DMPL said in a neighborhood regulatory filing on Wednesday.
DMFHL’s board may even pursue a sale of “all or substantially all” of the assets of the corporate and certain subsidiaries as a part of the Chapter 11 proceedings.
On May 5, a special shareholder group formed by certain lenders of DMFHL appointed a majority of directors to the boards of DMFHL and its subsidiaries following a litigation settlement. The lenders also secured 25% of DMPL’s equity in DMFHL.
“The newly constituted board of DMFHL has determined to pursue a value-maximizing sale process. The corporate has been advised that DMFHL has entered right into a restructuring support agreement (RSA) with a gaggle of its term lenders holding certain of DMFHL’s secured debt,” DMPL said.
“The RSA contemplates a sale of all or substantially all the assets of DMFHL and certain of its subsidiaries, amongst other strategic transactions to be implemented through Chapter 11 proceedings within the US,” it added.
Chapter 11 is a US legal process for an organization’s financial and operational restructuring. It allows the debtor to formulate a plan to deal with existing liabilities and related obligations, during which creditor debt collection efforts are generally halted by a moratorium throughout the proceedings.
DMFHL’s subsidiaries outside the US should not included within the Chapter 11 proceedings and proceed their operations.
“The corporate has been advised that this filing is a component of DMFHL’s overall strategic plan aimed toward maximizing value for its business operations and people of its subsidiaries,” DMPL said.
“Throughout this process, DMFHL and its operating subsidiary, Del Monte Foods Corp. II Inc. (DMFC), will proceed normal business operations,” it added.
In a separate disclosure, DMPL said it’s also studying the effect of deconsolidating DMFHL from the group.
“The corporate is within the technique of assessing the financial impact that its deconsolidation of DMFHL might need on the DMPL Group. Updates on such financial implications shall be provided sooner or later,” DMPL said.
As of end-January, DMPL’s net investment value in DMFHL was $579 million, while DMPL and its affiliates have $169 million in net receivables from DMFHL and its subsidiaries.
“The worth to be impaired shall be determined after the audit. Updates on the financial impacts shall be provided sooner or later,” DMPL said.
DMPL said its Asian and international businesses, led by subsidiary Del Monte Philippines Inc. (DMPI), proceed to perform well with resilient consumer demand, supported by a robust and stable supply chain.
“The corporate is confident in its ability to take care of uninterrupted business operations going forward,” DMPL said.
AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said in a Viber message that it remains to be possible for DMPL to satisfy its goal of economic recovery for fiscal years (FY) 2026 and 2027 amid the bankruptcy filing of its US business.
“It’s possible. The US business has long been a drag on DMPL, while their Philippine business has been doing quite well by comparison. Obviously we’ll see an enormous impairment loss for DMPL once the audit is finalized, but this still depends upon how much they are going to get for his or her stake in the corporate after the creditors take their share,” he said.
“DMFHL has been losing money since before DMPL acquired it in 2014, and DMPL has largely didn’t turn it around since. They acquired it for $1.675 billion in 2014 and, based on their filing, the investment is now value only $579 million,” he added.
Unicapital Securities, Inc. Research Head Wendy B. Estacio-Cruz said in a Viber message that the possible deconsolidation of DMPL’s US business could reshape the corporate’s financial outlook.
“While it removes a serious revenue stream, it can also remove a segment that’s been consistently dragging down overall performance, potentially improving the profitability of the remaining core businesses in Asia,” she said.
“If executed well, this move could speed up DMPL’s path to profitability by FY26–27. Nevertheless, near-term risks remain as a consequence of restructuring uncertainties,” she added.
For the third quarter of its fiscal 12 months ending April, DMPL said its net loss widened by 24% to $35.9 million as DMFC’s net loss increased to $40.5 million through the period as a consequence of higher costs and increased interest expenses.
DMPL shares rose by 0.63% or two centavos to P3.17 per share on Wednesday.