US-based food production and distribution company Del Monte Foods has announced a strategic move to enhance its financial standing by pursuing a value-maximising sale.
The branded food products provider has initiated voluntary Chapter 11 proceedings in the US Bankruptcy Court for the District of New Jersey.
The move is part of the company’s broader effort to restructure its balance sheet.
Del Monte Foods has entered into a restructuring support agreement (RSA) with a group of its lenders, focusing on a going-concern sale of its assets.
The RSA aims to secure the best offer to maximise value for all stakeholders, with the support of a lender group.
Del Monte Foods has secured $912.5m in debtor-in-possession financing to support its strategic initiatives and maintain operations.
The financing includes $165m in new funding from existing lenders, pending court approval.
Along with operational cash flow, the financing is expected to provide adequate liquidity during the sale process.
Del Monte Foods has filed customary “first day” motions to ensure a smooth transition into Chapter 11.
Upon court approval, the motions will allow the company to continue its business operations without interruption, including its current pack season.
Del Monte Foods’ non-US subsidiaries are not part of the Chapter 11 proceedings and will continue their operations as usual.
Herbert Smith Freehills Kramer (US) and Cole Schotz served as legal counsel, Alvarez & Marsal North America as financial advisors, and PJT Partners as investment bankers to Del Monte Foods.
Del Monte Foods President and CEO Greg Longstreet said: “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.
“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.”
