Del Monte Foods, one of North America’s largest producers, distributors and marketers of branded canned, frozen and fresh fruit and vegetable products, has initiated voluntary Chapter 11 proceedings in the US Bankruptcy Court for the District of New Jersey.
The Walnut Creek, California-headquartered company, a unit of Del Monte Pacific, has entered into a restructuring support agreement (RSA) with a group of lenders holding certain of its term loan indebtedness. The agreement contemplates undertaking a going-concern sale process for all or substantially all of its assets, with the support of the lender group under the RSA, which is targeted at obtaining the highest or best offer to maximize value for all stakeholders.
“This is a strategic step forward for Del Monte Foods. After a thorough evaluation of all available options, we determined a court-supervised sale process is the most effective way to accelerate our turnaround and create a stronger and enduring Del Monte Foods. With an improved capital structure, enhanced financial position and new ownership, we will be better positioned for long-term success,” said President and CEO Greg Longstreet.
In support of the company’s strategic transactions and funding of its ongoing operations, Del Monte Foods has secured a commitment for $912.5 million in debtor-in-possession financing, inclusive of $165 million in new funding, from certain of its existing lenders, subject to approval from the US Bankruptcy Court. This financing, along with cash from ongoing operations, is expected to provide sufficient liquidity during the sale process and fund ongoing operations in the ordinary course, including the company’s pack season that is presently underway.
Longstreet continued, “While we have faced challenges intensified by a dynamic macroeconomic environment, Del Monte Foods has nourished families for nearly 140 years, and we remain committed to our mission of expanding access to nutritious, great-tasting food for all. I am deeply grateful to our employees, growers, customers and vendors, as well as our lenders for their support in helping us achieve our long-term goals.”
To smooth transition into Chapter 11, the company has filed a number of customary “first day” motions that, upon approval from the court, will enable it to continue business operations in the ordinary course and on an uninterrupted basis.
The Del Monte Foods entities are the US indirect subsidiaries of Del Monte Pacific Limited and are not affiliated with certain other Del Monte companies around the world, including Fresh Del Monte Produce Inc., Del Monte Canada, Del Monte Asia Pte. Ltd., Conagra/Productos Del Monte, or Del Monte Panamerican. The non-US subsidiaries are not included in the Chapter 11 proceedings and continue to operate as usual.
