Del Monte borrows $515 M to fund US acquisition

MANILA, Philippines — Del Monte Pacific Ltd. has tapped $515 million in combined financing from Banco de Oro Unibank and Bank of the Philippine Islands to partly fund the acquisition of the consumer food business of privately-held American corporation Del Monte Foods.

This is in line with fund-raising plans to fund Del Monte Pacific’s  buyout of Del Monte Foods’ consumer food business for $1.675 billion, a deal that allows the Filipino-owned  company to break into the US market and reunite with the iconic American mother brand.

In a disclosure to the Philippine Stock Exchange on Wednesday, Del Monte Pacific said it had entered into a $350 million bridge loan facility with BDO to partly fund the US acquisition.

Separately, Del Monte entered into a term loan facility of up to $165 million with BPI, which is guaranteed by its parent firm Nutriasia Pacific Ltd.

On top of its debt financing, Del Monte Pacific said it was planning to raise $150 million for this acquisition through an equity placement.

“The company is in discussions with strategic investors to finalize the terms of an equity investment into the group. The investment amount will be about $74.5 million and it will be used to partially fund the proposed acquisition,” the disclosure said.

The balance of $75.5 million may be raised either through a share placement or a medium term loan or a combination of these, the disclosure added.

This acquisition would include Del Monte Foods’ leading U.S. canned fruit, vegetable and broth business under iconic American brands Del Monte, Contadina, S&W and College Inn. The deal, which is done through a subsidiary, adds net sales to Del Monte Pacific of more than $1.8 billion and adjusted cash flow based on earnings before interest taxes, depreciation and amortization of about $180 million.

With a 23,000-hectare pineapple plantation in the Philippines, 700,000-ton processing capacity and a port beside the cannery, Del Monte Pacific through subsidiary Del Monte Philippines operates the world’s largest fully integrated pineapple operation.

The local food manufacturer expects to benefit from much wider access to the processed pineapple business in the U.S., one of the largest packaged fruit segments in the American market, with the US acquisition.