Del Monte’s US subsidiary raises US$600m for refinancing purposes

DEL Monte Pacific’s US subsidiary Del Monte Foods Inc (DMFI) has raised US$600 million through a 7-year term loan B facility which matures in 2029.

In a bourse filing on Tuesday (May 17), dual-listed Del Monte said the facility is priced at a floating rate of adjusted SOFR (secured overnight financing rate), with a floor of 0.5 per cent plus 4.25 per annum.

Proceeds will be mainly used to redeem the group’s US$500 million senior secured notes due to mature in 2025, inclusive of redemption fees and accrued interest at a rate of 11.875 per cent per annum.

Del Monte estimates the latest term loan B facility’s much-lower interest rate compared to that of the senior secured notes will result in US$20-30 million of pre-tax interest savings per year.

Total one-off pre-tax transaction costs amount to about US$70 million, including redemption and other fees and a non-cash write-off of deferred financing cost in relation to the senior secured notes.

DMFI expects to recoup these one-off costs in about 3 years.

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Joselito D Campos, Jr, managing director and chief executive of Del Monte Pacific, sees the latest round of financing as the creditors’ “vote of confidence in Del Monte Foods’ sustained profitability”.

The group said DMFI’s recently upgraded credit rating of “B2” from “B3” by Moody’s, as well as S&P’s outlook upgrade on the stock to “positive”, reflect its US subsidiary’s strengthening operating performance.

This follows the prior year’s recapitalisation and major operational restructuring which had improved liquidity and leverage, it added.  

Shares of Del Monte on the Singapore Exchange were trading flat at S$0.35 as at the midday break, before the news.