By Revin Mikhael D. Ochave, Reporter
CAMPOS-LED Del Monte Pacific Ltd. (DMPL) said its United States subsidiary Del Monte Foods Holdings Ltd. (DMFHL) has filed for Chapter 11 bankruptcy and is seeking buyers for its assets.
DMFHL and certain subsidiaries began voluntary Chapter 11 proceedings in the bankruptcy court for the District of New Jersey on July 1, granting access to $912.5 million in financing to support their operations, DMPL said in a local regulatory filing on Wednesday.
DMFHL’s board will also pursue a sale of “all or substantially all” of the assets of the company and certain subsidiaries as part of the Chapter 11 proceedings.
On May 5, a special shareholder group formed by certain lenders of DMFHL appointed a majority of directors to the boards of DMFHL and its subsidiaries following a litigation settlement. The lenders also secured 25% of DMPL’s equity in DMFHL.
“The newly constituted board of DMFHL has determined to pursue a value-maximizing sale process. The company has been advised that DMFHL has entered into a restructuring support agreement (RSA) with a group of its term lenders holding certain of DMFHL’s secured debt,” DMPL said.
“The RSA contemplates a sale of all or substantially all of the assets of DMFHL and certain of its subsidiaries, among other strategic transactions to be implemented through Chapter 11 proceedings in the US,” it added.
Chapter 11 is a US legal process for a company’s financial and operational restructuring. It allows the debtor to formulate a plan to address existing liabilities and related obligations, during which creditor debt collection efforts are generally halted by a moratorium for the duration of the proceedings.
DMFHL’s subsidiaries outside the US are not included in the Chapter 11 proceedings and continue their operations.
“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.
“Throughout this process, DMFHL and its operating subsidiary, Del Monte Foods Corp. II Inc. (DMFC), will continue normal business operations,” it added.
In a separate disclosure, DMPL said it is also studying the effect of deconsolidating DMFHL from the group.
“The company is in the process of assessing the financial impact that its deconsolidation of DMFHL might have on the DMPL Group. Updates on such financial implications will be provided in due course,” DMPL said.
As of end-January, DMPL’s net investment value in DMFHL was $579 million, while DMPL and its affiliates have $169 million in net receivables from DMFHL and its subsidiaries.
“The value to be impaired will be determined after the audit. Updates on the financial impacts will be provided in due course,” DMPL said.
DMPL said its Asian and international businesses, led by subsidiary Del Monte Philippines Inc. (DMPI), continue to perform well with resilient consumer demand, supported by a strong and stable supply chain.
“The company is confident in its ability to maintain uninterrupted business operations going forward,” DMPL said.
AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said in a Viber message that it is still possible for DMPL to meet its goal of financial recovery for fiscal years (FY) 2026 and 2027 amid the bankruptcy filing of its US business.
“It’s possible. The US business has long been a drag on DMPL, while their Philippine business has been doing quite well by comparison. For sure we’ll see a huge impairment loss for DMPL once the audit is finalized, but this still depends on how much they will get for their stake in the company after the creditors take their share,” he said.
“DMFHL has been losing money since before DMPL acquired it in 2014, and DMPL has largely failed to turn it around since. They acquired it for $1.675 billion in 2014 and, based on their filing, the investment is now worth only $579 million,” he added.
Unicapital Securities, Inc. Research Head Wendy B. Estacio-Cruz said in a Viber message that the possible deconsolidation of DMPL’s US business could reshape the company’s financial outlook.
“While it removes a major revenue stream, it may also remove a segment that’s been consistently dragging down overall performance, potentially improving the profitability of the remaining core businesses in Asia,” she said.
“If executed well, this move could accelerate DMPL’s path to profitability by FY26–27. However, near-term risks remain due to restructuring uncertainties,” she added.
For the third quarter of its fiscal year ending April, DMPL said its net loss widened by 24% to $35.9 million as DMFC’s net loss increased to $40.5 million during the period due to higher costs and increased interest expenses.
DMPL shares rose by 0.63% or two centavos to P3.17 per share on Wednesday.
