Del Monte Foods, a major player in America's canned food supply chain, has filed for Chapter 11 bankruptcy in New Jersey as part of a broader strategic restructuring effort. The company does not anticipate that the bankruptcy process will cause any disruptions to the canned food market.
The 138-year-old food company, a U.S. unit of Singapore-based Del Monte Pacific, best known for its canned fruits and vegetables, entered into a restructuring support agreement with a group holding some of its term loan debt. The company stated it's "pursuing a value-maximizing sale process as part of an overall strategic balance-sheet restructuring."
A filing with the U.S. Bankruptcy Court for the District of New Jersey states the company, whose brands include Del Monte, Contadina, College Inn, Kitchen Basics, JOYBA, Take Root Organics, and S&W, said it has both liabilities and assets estimated between $1 billion and $10 billion and secured $912.5 million in debtor-in-possession financing, including $165 million in new funding, from some of its current lenders.
"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 Greg Longstreet, President and CEO of Del Monte Foods.
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."
Bloomberg noted, "The development ends a challenging year for the borrower that saw its parent company Del Monte Pacific Ltd. in June elect to skip a payment to the unit's lenders as part of a lawsuit settlement tied to a controversial debt restructuring."
Del Monte's operations date back to the mid-1880s, when California-based merchants began using the name "Del Monte" to market high-quality coffee for the Hotel Del Monte in Monterey. By 1892, it expanded to canned fruit and has since grown to control a sizeable portion of the U.S. canned food market.
The good news is that Del Monte does not expect any supply shortages in the canned food market as a result of its bankruptcy proceedings.
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