Del Monte sets price for stock rights issue

On January 31st, Del Monte Pacific Limited (DMPL) announced it had set the share price of its rights issue at P10.60 in the Philippine market and SGD 0.325 in the Singapore market, which is set to raise $154.4 million. Less than the $180 million initially targeted by the food giant to reduce its debt following the acquisition of its US counterpart Del Monte Foods, Inc. (DMFI).
Still, this falls in line with the long term growth strategy mentioned by DMPL Chairman of the board Rolando Gapud: “We have several growth strategies in the pipeline, we are quite confident about this”.
The company said, with regards to the Philippine Stock Exchange (PSE), that the offer price was calculated with a 20.6% discount on the reference price. Rolando Gapud also said they were to sell over 641 million shares.
DMPL explained that “the Reference Price is the theoretical ex-rights price calculated on Pricing Date having regard to the gross proceeds to be raised and the Volume-Weighted Average Price of an ordinary share of DMPL for trades on the PSE and the Singapore Exchange Securities Trading Limited” The calculation is made over a period of “five market days prior to and including the Pricing Date”.
Rolando Gapud also confirmed that Del Monte’s majority shareholder NutriAsia Pacific Ltd. with about 67% equity, will be subscribing to its share of the stock rights issue following the official requests filed with the concerned stock exchange authorities.
Proceeds of the planned rights offering will be used to repay a loan granted by the Bank of the Philippine Islands (BPI) for $165 million for the acquisition of DMFI.
As issue managers, Del Monte has appointed DBS Bank Ltd. in Singapore and BPI Capital Corporation in the Philippines.
Del Monte plans to raise a total of $630 million to refinance the massive loan it used to acquire DMFI.
Additionally, DMPL is planning on issuing preferred shares accessible to Filipino investors. “Both are scheduled to go to market within the next two to three months”, said Rolando Gapud.
DMFI represents 80% of DMPL’s annual turnover and is set to become a focal point of the company’s multinational expansion plans.