Del Monte raises over $150M from US dollar shares

DEL MONTE Pacific Limited will partially exercise the over- allotment option for the country’s first offering of US dollar- denominated securities, the issue manager of the deal said.

On the sidelines of the listing ceremony of Megaworld Corp.’s P12 billion fixed- rate bonds in Makati City on Tuesday, BDO Capital & Investment Corp. President Eduardo V. Francisco told reporters Del Monte will raise “a little over $150 million” from the sale of dollar-denominated preferred shares, but it will be less than the maximum amount to be raised $250 million.

“Oversubscribed kaya lang kulang sa time. Hindi naman namin ma- extend yung offer period kasi kabangga namin ang RTBs ( It’s oversubscribed but we lack time. We couldn’t extend the offer period because it will be up against RTBs). That’s part of a clear market,” Mr. Francisco said, referring to the government’s issuance of retail treasury bonds, which started yesterday.

The offer period for the sale of 15 million dollar-denominated preferred shares priced at $10 per share, with an oversubscription option of up to 10 million shares, ended on Tuesday. The shares will be listed on the Philippine Stock Exchange on April 7.

Demand from institutional investors and high net worth individuals have fully covered Del Monte’s $ 150- million dollar- denominated securities offering at pricing date on March 20, Mr. Francisco said on March 22. The dividend rate for the securities was pegged at 6.625%.

“We’re very happy because it shows you how good Del Monte as a name is,” Mr. Francisco said.

Del Monte is the first company to take advantage of the new investment instrument, which allows listed companies to raise fresh capital in US dollars to meet their dollar requirements. It also provides investors with dollar holdings an alternative investment vehicle.

As of March 24, only eight brokers are eligible to trade dollar-denominated securities.

The global fruit canning giant is using proceeds from the offer to refinance a $ 350- million bridge loan with BDO Unibank, Inc. that partially funded the $ 1.68- billion acquisition of Del Monte Foods, Inc. (DMFI) in 2013.

Del Monte expect DMFI, which accounts for 80% of sales, to recover in two to three years. Operations in the United States has posted sluggish sales amid lingering weakness in the canned fruit industry, supply-related issues that dampened the sales of regional brands in the packaged vegetable category, and lower sales of the private label business.

The company is likewise ramping up sales to China as part of a multiyear goal to jack up the share of the non- US businesses to 40% of total revenues from 20% and reduce the contribution of the US to 60%.

For the nine months ending January, Del Monte posted a net profit of $19.9 million, down 38% from a year earlier, after sales fell around 2% to $1.71 billion.

Shares in Del Monte lost 10 centavos or 0.82% to end at P12.10 apiece on Tuesday.