The Securities and Exchange Commission (SEC) has approved the P7.5 billion fixed rate bond float of Campos-led fruit canner Del Monte Philippines Inc.
The company is offering P5 billion worth of bonds, with an oversubscription option of up to P2.5 billion.
Del Monte will issue the bonds at face value, consisting of series A bonds due 2023 and series B bonds due 2025. These will be listed and traded on the Philippine Dealing and Exchange Corp.
The company expects to net P7.38 billion in proceeds from the offer, assuming the oversubscription option is fully exercised. Proceeds from the offer will be used to repay the company’s existing debt, which are short-term and unsecured in nature.
BDO Capital and Investment Corp., China Bank Capital Corp., First Metro Investment Corp. and RCBC Capital Corp. were tapped as joint issue managers, joint lead underwriters and joint bookrunners for the offer.
Del Monte Pacific Ltd. said it incurred a $3.2-million loss in its fiscal first quarter for 2021 ending July, from last year’s recurring income of $4.2 million mainly on higher financial expenses.
Sales for the period reached $413.1 million, higher by 10 percent from last year’s $375.9 million mainly driven by increased US and Philippines sales.
Given the seasonality of the business, the first quarter is historically the lowest quarter of the group, the company said.
The US subsidiary, Del Monte Foods Inc. generated $268.2 million or 65 percent of group sales. Its sales rose 11 percent from last year mainly driven by improved volume across almost all categories from the pandemic, partly offset by supply challenges on core vegetables and fruits.
The principal categories experienced strong growth as consumer behavior shifted to healthy, shelf-stable products in response to covid-19, the company said.
Revenues of Del Monte Philippines, meanwhile, grew 22 percent in peso terms and 18 percent in dollar terms to $18.7 million, driven by higher volume, favorable sales mix and buoyed by favorable peso-dollar exchange rate.
Faster growth was seen across all categories, especially behind flagship Del Monte brands of Spaghetti Sauce, Quick ‘n Easy Meal Mixes and Pineapple Juice.
“The relevance of these iconic Del Monte brands became magnified in a pandemic environment where consumers turned to healthy food and cooked more meals at home with the company’s culinary products,” it said.
“Our strategy is to strengthen the core business, expand the product portfolio, in line with market trends for health and wellness, and grow our branded business while reducing non-strategic business segments.”
The company said it will return to profitability during its fiscal year 2021, which ends in April.
Sales of the S&W branded business declined by 19 percent in the first quarter as higher sales of packaged products, such as canned pineapples, mixed fruits, beans and corn were offset by lower sales of fresh pineapples in China.
Fresh pineapples sold through the foodservice channel such as restaurants, hotels and airlines, were impacted though there had been some improvements at the end of the first quarter.
“The group expects its ‘Fresh’ business to grow in the remainder of the year,” it said.