DEL Monte Pacific Ltd. (DMPL) said Tuesday that US subsidiary Del Monte Foods Inc. (DMFI) had secured a new loan facility of up to $240 million (P13.9 billion) for Del Monte Foods II Inc. (DMFC).
DMFC will be able to borrow an initial $210 million (P12.1 billion) and tap an additional $30 million (P1.7 billion) in the future “under certain circumstances where a parent contribution is not made.”
“The new term facility will enhance DMFI’s liquidity by injecting additional capital into the company, thereby improving its ability to meet short-term obligations and fund operational needs more effectively,” the company said in a statement.
The increased liquidity is expected to provide the necessary financial flexibility for DMFI’s growth and capitalize on strategic opportunities.
“The US business has adequate financing in place to seize growth opportunities, navigate potential challenges effectively and drive future profitability, especially as market conditions in the US are anticipated to improve,” DMPL noted.
The new term facility will mature in August 2028 and does not include any financial covenants.
DMFC and Del Monte Foods Holding Limited will be required to implement governance changes if financial milestones are not met.
The board will be required to form special committees of independent directors vested with full authority to explore and implement strategic alternatives.
The financial milestones include a minimum earnings before interest, taxes, depreciation and amortization test for January 2025 and a parent contribution of at least $30 million that will be made to DMFC before end-January next year.
“The requirements and implications of such milestones may cease to be effective upon the satisfaction of certain conditions…,” DMFC said.
DMPL shares fell by 13 centavos to P4.12 apiece on Tuesday.
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