Del Monte’s U.S. unit files for bankruptcy
The American arm of Del Monte Pacific Ltd. (DMPL) has filed for bankruptcy protection in the United States to restructure its business and deal with its debts.
In a disclosure to the stock exchange on Wednesday, DMPL confirmed that its subsidiary, Del Monte Foods Holdings Ltd. (DMFHL), filed for Chapter 11 proceedings in the US Bankruptcy Court in New Jersey 1 July.
A group of lenders — who now control most of DMFHL’s board — decided to pursue a sale of the company’s assets as part of a court-supervised process.
DMFHL has entered into a restructuring support agreement with some of its lenders and will continue to operate while the process is ongoing.
As part of the bankruptcy process, DMFHL and some of its subsidiaries will have access to about $912.5 million in financing to keep their operations running.
Legal process
DMPL explained that Chapter 11 is a legal process in the US that allows a company to keep operating while it works out a plan to pay off its debts.
“Chapter 11 allows a company, through its existing management, to continue operating in the ordinary course. The Company has been advised that this filing is part of DMFHL’s overall strategic plan aimed at maximizing value for its business operations and those of its subsidiaries,” DMPL said.
DMFHL’s US operations, including its main subsidiary Del Monte Foods Corporation II Inc., will continue business as usual.
Its non-US operations, such as in Latin America, are not affected by the filing.
No impact on other business including DMPI
DMPL also clarified that this development has no impact on its other businesses, including Del Monte Philippines Inc. (DMPI). Despite the situation in the US, the company said its Philippine and Asian businesses remain strong.
“DMPI, with its Asian and international businesses, continues to perform well, with resilient consumer demand, supported by a strong and stable supply chain. The Company is confident in DMPI’s ability to maintain uninterrupted business operations going forward.”
DMPL advised shareholders to be cautious. “Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company and to consult their financial, tax or other professional advisers if they are in doubt as to the action to take,” it said.