Del Monte Pacific Ltd. (DMPL), listed in the Philippines and Singapore, yesterday reported that it expects to reduce its huge debts starting next year with the planned sale of shares worth $515 million.
Joselito Campos Jr., DMPL chief executive officer and managing director reported that the company is “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.
The company yesterday reported that acquisition cost of US unit Del Monte Foods Inc. slashed its net income in the second quarter ending
October to $185,000 from $8.85 million a year ago.
Second quarter revenue soared to $547.98 million from $136.3 million last year, with DMFI contributing $435 million to overall sales.
For its fiscal first half from April to October, the company reported a $21.7-million net loss against a net income of $12.96 million in the same period last year.
Revenue in the six months to October jumped to $993.63 million from $255.66 million a year ago, with more than $700 million contributed by the newly acquired DMFI.
The company said that first quarter earnings from April to July were especially hit by a non-recurring expense of $20.5 million related to its $1.68 billion acquisition of DMFI last February, which also dragged down its first-half performance.
It said acquisition costs as well as the purchase of additional inventory and other non-recurring expenses continued to affect its financial performance in the second quarter.
“We are encouraged by the consumers’ response to our initiatives in the US and we expect to continue to gain market share in the coming quarters. Our branded business in Asia continued to broaden and deepen its market penetration and there, too, we are encouraged with customer reaction,” said Campos.
The company is set to raise a maximum of $360 million in fresh funds from the sale of US-dollar dominated preferred shares overseas, as well as a P93.5-million ($2.1 million) follow-on offering locally that is expected to be completed next year. Both fundraising ventures will help refinance debt incurred from the US subsidiary acquisition.
The follow-on offer next year involves the sale of 5.5 million ordinary shares in the domestic market, priced at P17 each.
DMPL listed on the local bourse by way of introduction, a method requiring companies to conduct a follow-on offering within 12 months. The company, which is already listed on the Singapore Exchange, listed on the Philippine Stock Exchange on June 10 last year.
It adjusted its fiscal year to April to May from the previous January to December to align with the financial year of its US subsidiary DMFI.
DMPL owns the leading brand Del Monte across food and beverage categories in the Philippines. It also has a presence in India via the joint venture firm FieldFresh Foods with one of India’s largest conglomerates, Bharti Enterprises.