Del Monte Pacific absorbs $20-M loan to settle lawsuit involving US units
DEL MONTE PACIFIC Ltd. (DMPL) incurred a $20-million increase in its debt as part of a settlement with the lenders of its US subsidiaries, the listed food and beverage manufacturer said on Thursday.
DMPL, along with certain lenders, negotiated a settlement following an alleged default of Del Monte Foods, Inc.’s (DMFI) facility agreement signed in May 2022, the company said in a stock exchange disclosure.
“The settlement loan increases the Del Monte Pacific Group’s interest expense by about $4 million annually and raises the group’s debts by $20 million,” the company said.
“The company agreed to contribute either by equity or a subordinated loan to the subsidiary by May 5, 2025,” it added.
In October 2024, a group of lenders under the term loan agreement of DMFI signed in 2022 sued DMFI, two other Del Monte Foods Holdings Ltd. (DMFHL) subsidiaries, and certain directors in the State of Delaware Court of Chancery.
The group of lenders did not participate in the new term facility agreement completed in August 2024. DMFHL is the immediate parent company of DMFI, which is the US subsidiary of DMPL.
“The complaint alleged that certain defaults and events of default had occurred under the 2022 DMFI Facility Agreement and that as a result of such defaults and events of default, plaintiffs were entitled to remove the current directors of DMFI and two other DMFHL subsidiaries and replace those directors with the plaintiffs’ own appointees,” DMPL said.
“The defendants denied that any defaults or events of default had occurred under the 2022 DMFI Facility Agreement and vigorously contested the plaintiffs’ allegations and purported exercise of remedies,” it added.
A trial was held in mid-February, and a post-trial hearing was set for April 9. The settlement was negotiated in advance of the post-trial hearing.
“The lawsuit has now been dismissed with finality. In connection with the settlement, all indebtedness under the 2022 DMFI Facility Agreement will be retired,” DMPL said.
“In case the company decides not to provide any monetary contribution, a majority of directors on the boards of DMFHL and each of its subsidiaries would be appointed by the lenders, and certain governance changes would be put in place, and a portion of the company’s equity in DMFHL would be applied to partially pay the settlement loan,” it added.
For the first nine months of its fiscal year 2025 ending in April, DMPL widened its net loss to $92.2 million due to weaker US operations. Sales rose by 3% to $1.9 billion on higher exports of fresh pineapples and packaged products.
Nine-month net debt fell by 6.9% to $2.27 billion due to better inventory management.
DMPL shares rose by 3.21% or nine centavos to P2.89 per share on Thursday. — Revin Mikhael D. Ochave
