Del Monte Pacific

(23-09-2014, 09:35 AM)CityFarmer Wrote:

(23-09-2014, 08:27 AM)mrEngineer Wrote: Classic example of good business but poor financial management record. Likelihood of turnaround should be high but can investors stomach the level of debt?

Debt is the enemy of turnaround story. I am watching this stock as well. Unless the debt level is managed properly, otherwise the story remains weak.

(not vested)

The debt is massive and the USD 300MM Philippine Pref Share issue (which is supposed to improved the capital structure together with a smaller share placement or rights issue) still hasn't occurred. The only saving grace is that interest rates are so low but once they start to rise...

Not vested

This is an LBO. Group EBITDA of US$21.5m can't even cover interest expense of US$23.9m is indeed worrisome with cash of just US$28.5m. Cash call have to come sooner rather than later.

(23-09-2014, 04:01 PM)specuvestor Wrote: This is an LBO. Group EBITDA of US$21.5m can't even cover interest expense of US$23.9m is indeed worrisome with cash of just US$28.5m. Cash call have to come sooner rather than later.

Here it comes...

Base on the official announcement, the discount is 20% to 25% to a reference price, which is pretty high IMO.

A right of 642 mil new share, vs. existing share base of 1.3 billion shares. What a dilution for those not subscribing...

http://infopub.sgx.com/FileOpen/DMPL%20-...eID=329020

(not vested)

Del Monte Pacific plans sale of 642 mil new shares in Singapore, Philippines

SINGAPORE (Dec 22): Del Monte Pacific ( Financial Dashboard) revealed more details about its planned rights issue.

The pineapple, tomato and fruit juice company, said it intends to sell up to 641.9 million new shares in the Singapore and Philippines stock markets to raise US$180 million ($237.4 million).

Del Monte Pacific is using the net proceeds of the rights issue to repay the bridging facility of US$165 million from the Bank of Philippines Islands that the company had obtained to partially finance the acquisition of Del Monte Foods which was completed in February.

Del Monte Pacific said the company is not in a position to fix the rights price at the time of the announcement as this has yet to be agreed upon among the lead managers and underwriters for the Singapore and Philippines rights issue and the company.

DBS Bank ( Financial Dashboard) has been appointed as the lead manager and underwriter for Singapore while the company intends to appoint BPI Capital Corporation as the lead manager and underwriter for the Philippines rights issue.

Substantial and controlling shareholder NutriAsia Pacific Ltd (NPL) which holds a 66.76% stake in Del Monte Pacific intends to subscribe to its entitlements in the rights issue.

Del Monte Pacific closed flat at 50 cents today.
http://www.theedgemarkets.com/sg/article...hilippines

Scary...can never win them

The company is walking on thin ice...

(not vested)

Del Monte Pacific shelves US$360-million preference-share sale

SINGAPORE (Jan 22): Del Monte Pacific ( Financial Dashboard) has deferred a planned sale of up to US$360 million ($468 million) worth of preference shares meant for refinancing a bridging loan.

"In view of weak global market conditions, the company has decided to defer the offering," it said in a statement this morning.

Del Monte said on Dec 5 it would issue US-dollar denominated preference shares to institutional investors and use the proceeds to refinance a loan for the acquisition of the consumer food business of Del Monte Corp announced earlier this year.

With the plan shelved, the company said it will now seek to extend the bridging loan from BDO Unibank.

Del Monte Pacific shares rose 2.1% to 48.5 cents yesterday
http://www.theedgemarkets.com/sg/article...share-sale

Del Monte gets approval for rights issue in Singapore, Philippines: http://btd.sg/1ybXYeI

(30-01-2015, 10:00 AM)greentea Wrote: Del Monte gets approval for rights issue in Singapore, Philippines: http://btd.sg/1ybXYeI

Just an update. The company has extended the bridge loan.

"The Company wishes to announce that BDO Unibank Inc. has approved the extension of its
US$350 million bridge loan into a medium term facility."

http://infopub.sgx.com/Apps?A=COW_CorpAn...b2138e9b6c

as of the most current FS,
http://infopub.sgx.com/FileOpen/DMPL_3Q_...eID=338269
even after the dilution and rights issue
Total Liabilities 2,462,307
Total Equity 219,849

basically the management is borrowing 10 time its equity to bet, I am not sure how capable the management is, how it is going to turn the business around, but the takeover that cause these problems, the failure of preference share doesn't, speak very well of the financial capabilities of the management. The bet doesnt seem to justify the borrowing, it is losing money, not a good sign, it is cancelling its preference share, i guess no one will subscript to it, or the cost will be so high, that the company cannot pay, so the market is punishing its price, it is at 12 years low, at current price of 0.31 will it be a good bet? I will not bet my money, they might not make enough to pay the interest, just like the most recent quarter. but it is definitely a good business, but somehow turn into a financial bet, but at lower price, I am willing to bet. Better let time paint a clearer picture of what this company is going to be

Vested in them recently so my take could be bias.

The management is not really borrowing 10 times to bet, Del Monte Food had $900mil of debts to start with and they were still able to churn out profit before the acquisition, DMPL "only" took up $700+mil of debts. $150mil is covered using their rights issues, $350mil was covered by the mid term bridge loan (2 years i think), and the remaining by their cash and existing loan facility.

In terms of results, they seemed to be able to cover for the interest expenses (even before the rights issue) if you look beyond the one off expenses such as their step up inventory (which causes cogs to be higher, reducing gross profit).

Cash flow is still pretty positive, and like what you mentioned, I feel the current low price is worthy of a bet. The fear i have is that they are not able to maintain or grow the current level of ops income..

(13-03-2015, 09:37 AM)testwrite Wrote: as of the most current FS,
http://infopub.sgx.com/FileOpen/DMPL_3Q_...eID=338269
even after the dilution and rights issue
Total Liabilities 2,462,307
Total Equity 219,849

basically the management is borrowing 10 time its equity to bet, I am not sure how capable the management is, how it is going to turn the business around, but the takeover that cause these problems, the failure of preference share doesn't, speak very well of the financial capabilities of the management. The bet doesnt seem to justify the borrowing, it is losing money, not a good sign, it is cancelling its preference share, i guess no one will subscript to it, or the cost will be so high, that the company cannot pay, so the market is punishing its price, it is at 12 years low, at current price of 0.31 will it be a good bet? I will not bet my money, they might not make enough to pay the interest, just like the most recent quarter. but it is definitely a good business, but somehow turn into a financial bet, but at lower price, I am willing to bet. Better let time paint a clearer picture of what this company is going to be

Another interest point might be testwrite's point on "no one will subscript to it".. Lee Pineapple was their 2nd largest shareholder, but they did not subscribe to the rights. Might be that the company is really unattractive to them to invest more money in.. There's no other substantial shareholder that's interested to put more money in now except for the Campos family..