MANILA, Philippines — The US subsidiary of Singapore and Philippine-listed Del Monte Pacific Ltd. (DMPL) has secured a fresh financing arrangement of up to $240 million to support growth opportunities.
In a stock exchange filing, DMPL said its US subsidiary, Del Monte Foods Inc. (DMFI), and some of its existing lenders completed a new financing arrangement, which involves a term loan facility for DMFI subsidiary Del Monte Foods Corp. II Inc. (DMFC).
The new term facility provides DMFC with $210 million of first-out new money financing.
It likewise includes the potential for further borrowings in the amount of $30 million in the future “under certain circumstances where a parent contribution is not made.”
By injecting additional capital into the company, DMPL said the new term loan facility would enhance DMFI’s liquidity and improve its ability to meet short-term obligations and fund operational needs more effectively.
“The increased liquidity will also provide it with the necessary financial flexibility to pursue growth plans and capitalize on strategic opportunities as they arise,” DMPL said.
“Overall, the new term facility will ensure that 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,” the company said.
While the new term loan facility does not include any financial covenants, DMFC and Del Monte Foods Holdings Ltd., an intermediate parent company of DMFI, will be required to implement certain governance changes if certain financial milestones are not met.
These governance changes include such boards being required to form special committees comprised of independent directors vested with full authority to explore and implement strategic alternatives.
The financial milestones, meanwhile, include requirements with respect to EBITDA tests, including a minimum EBITDA test for January 2025 and a parent contribution of at least $30 million made to DMFC prior to Jan. 31, 2025.
“The requirements and implications of such milestones may cease to be effective upon the satisfaction of certain conditions involving a qualifying refinancing, and if applicable, satisfaction of a maximum leverage ratio requirement and compliance with certain budget milestone tests,” DMPL said.
With the group’s current liabilities as of end April exceeding its current assets by $417.3 million due mainly to long-term loans that have matured and will be due within the next 12 month, DMPL had earlier assured of its ability to pay its liabilities when they fall as it continues to find new sources of funding to improve cash management.
Last month, DMPL said the group has new proposals from reputed financial institutions for new long-term loans, while it also continues to get incremental short-term lines from partner banks for meeting its short-term obligations.
DMPL still expects to incur a net loss for fiscal year 2025 although at a reduced amount. It sees a return to profitability by fiscal year 2026.
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