DMPL seeks investor after rejecting $45-M settlement contribution

LISTED Del Monte Pacific Ltd. (DMPL) said it is in talks with a potential investor for its US subsidiary after deciding against contributing up to $45 million for a litigation settlement deal.

DMPL’s board opted not to provide the $45-million contribution to the new term facility lenders of its US subsidiary, Del Monte Foods Holdings Ltd. (DMFHL), the food and beverage manufacturer said in a regulatory filing on Tuesday.

“DMPL has prioritized sustaining the momentum of its core Philippine and export businesses, which continue to deliver strong sales and profit growth,” the company said.

DMPL, along with certain lenders, negotiated a settlement following an alleged default on a term loan agreement signed in May 2022 involving US subsidiaries. The settlement agreement required DMPL to contribute up to $45 million by May 5.

The entire 2022 term loan had been retired through the settlement loan from a group of other existing lenders.

“Such litigation had been dismissed with finality in the US,” DMPL said.

Following DMPL’s decision, a 25% equity stake in DMFHL will now be allocated to partially offset the settlement loan as part of the settlement terms.

DMPL’s 25% equity stake in DMFHL will repay 37% of the settlement loan. The balance of 63% of the settlement loan continues to be a first-out incremental loan due from DMFHL to the new term facility lenders.

Lender-appointed directors will also assume majority board representation in DMFHL and its subsidiaries following DMPL’s decision not to contribute to the settlement.

With this, DMPL said it is currently in preliminary discussions with a potential investor regarding investment opportunities in DMFHL.

“These discussions are expected to be protracted, and the new term facility lenders have expressed support for this initiative,” DMPL said. 

As of end-January, DMPL’s net investment value in DMFHL stood at $579 million. DMPL, along with its affiliates, also has $169 million in net receivables from DMFHL and its subsidiaries.

DMPL shares rose by 17.65% or 51 centavos to P3.40 each on Tuesday. — Revin Mikhael D. Ochave