Del Monte Pacific defends solvency after SGX flags US$787 million deficit

[SINGAPORE] Del Monte Pacific has defended its ability to remain a going concern, pushing back against regulatory concerns over its working capital deficit and thin cash reserves.

Responding to queries from the Singapore Exchange (SGX) about its financial year 2026 results, the dual-listed canned food producer stated on Wednesday (Jul 8) that its operating business remains “fundamentally sound” and that its liquidity issues are tied to its capital structure, not deteriorating operations.

The exchange had flagged that Del Monte Pacific carried a net capital deficit of US$589.9 million as at Apr 30, with current liabilities outstripping assets by US$787.2 million. The company ended FY2026 with just US$8 million in cash.

Management dismissed the US$8 million figure as a snapshot of its working capital cycle rather than its full liquidity, pointing to its available revolving credit facilities. The company noted that its current liability position is heavily skewed by US$452.7 million in revolving bank borrowings that are renewed on an ongoing basis.

To support its solvency claims, the board highlighted the performance of its primary cash-generating unit, Del Monte Philippines. The subsidiary reported a 43 per cent jump in operating profit to US$153.6 million in FY2026, while net profit rose 37 per cent to US$103.1 million.

Debt obligations loom

Despite the operational growth, the clock is ticking on the company’s debt obligations. Del Monte Pacific is working with an external financial restructuring adviser to finalise an integrated plan to reorganise its obligations.

While one principal banking counterparty has formally waived covenant requirements through September 2027, waivers from the company’s other main lenders are set to expire in or around September 2026.

The company stated that discussions with lenders are “active and ongoing”, adding that counterparties have engaged constructively and no formal notices of acceleration or enforcement have been received.

The company also used the filing to provide an update on a disclaimer of opinion issued by its auditors for FY2025. The audit issue stemmed from missing financial data tied to its US subsidiary, Del Monte Foods, which had been undergoing Chapter 11 bankruptcy proceedings.

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Following the US unit’s emergence from Chapter 11 in June, Del Monte Pacific stated it is now providing auditors with the necessary independent valuations and schedules to substantially resolve the issue.

Fall from grace

At its height in 2013, Del Monte Pacific had a market capitalisation exceeding S$1 billion. At this time, the stock was around the S$0.811 mark, pushing it to its highest recorded valuation.

This record valuation occurred just before the company announced its US$1.7 billion acquisition of the US-based Del Monte Corporation’s consumer food business.

At the time, investor sentiment was high due to the company’s strong performance across the Philippines and Asia, and the anticipation of the global Del Monte brand’s reunification.

But the company then took on significant debt – over US$1 billion – to finance the buyout. Since then, the combination of high interest expenses, changing consumer habits and impairment losses from the US business has caused its market capitalisation to steadily decline to its current valuation of about S$155 million.