Del Monte sells off more US assets

Iris Gonzales (The Philippine Star) - November 20, 2019 - 12:00am

MANILA,Philippines — Del Monte Foods Inc. continues to sell assets as part of the group’s restructuring efforts to remain competitive.

It successfully sold and transitioned its Cambria, Wisconsin operations to Seneca Foods Corp.

DMFI has also entered into an agreement to sell its production facilities in Sleepy Eye, Minnesota and Mendota, Illinois and expects the closure and sale of these facilities in the fourth quarter of 2020.

Prior to this, the US subsidiary of Del Monte Pacific Ltd. had already sold the equipment at its Crystal City, Texas facility.  It is considering additional proposals to sell the balance of the Crystal City assets.

These divestments will enable DMFI to significantly improve capacity utilization in the remaining plants in its production network.

“While DMFI’s Asset Light Strategy has been a complex undertaking, it has been a critical step in repositioning DMFI for the future. Execution of this strategy and other cost saving initiatives should improve the group’s EBITDA margin by an estimated 225 to 275 basis points ($50–$60 million) over the next 24 months,” DMPL said in a disclosure yesterday.

Furthermore, a portion of the savings would be reinvested in the growth and expansion of DMFI’s brands.

DMPL said there is a a growing shift in preference in the US for healthy and plant-based foods.

“DMFI is capitalizing on growing consumer desire for convenient, healthy and tasty plant-based foods. It is expanding its brands beyond center store grocery into higher growth categories such as frozen, produce and deli, and expanding its presence within the food service, convenience store and club store channels,” DMPL said.

The group is also evaluating options to refinance existing DMFI loan facilities of approximately $1.4 billion, comprised of $442.5 million (asset based loan facility), $670 million (first lien term loan) and $260 million (second lien term loan), which will mature in November 2020, February 2021, and August 2021, respectively.

Pernia said it will do the economy more harm than good if rice imports are stopped because there will be a renewed spike in inflation because of higher rice prices.

“We will be back to last year, and the poor will suffer. You know the inflation for the 30 percent poorest has really come down to 0.9 percent,” he said.

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