Del Monte Philippines Selling Shares to Singapore’s SEA Diner for $130m

The deal comes after Del Monte Philippines shelved its planned IPO in the Philippines.

Del Monte Philippines

Del Monte Philippines Inc is selling a 13-percent share to Singapore-based consumer sector-focused firm SEA Diner Holdings for approximately $130 million after shelving its planned $258-million initial public offering (IPO).

In a disclosure to the Singapore Exchange (SGX), Del Monte Pacific Limited (DMPL) said it has entered into an agreement with SEA Diner for the proposed sale of about 364 million existing ordinary shares of Del Monte Philippines, which represent 13 percent of the total number of issued and paid-up ordinaries in the company.

SEA Diner is a Singapore-incorporated company focused on investing in leading companies in the consumer sector China and the ASEAN region. It has invested over $1 billion in ASEAN and Chinese businesses to date, including consumer product and technology companies.

An indirect wholly-owned subsidiary of DMPL, the company produces and sells various food and beverage products such as fruit juices, packaged pineapple, and culinary mixes, spaghetti sauces, mixed fruits, and a lot more.

In February 2018, the company announced its intention to public offer and list some of its ordinary shares on the Philippine Stock Exchange to raise funds to partially prepay/repay certain loan facilities, with the balance proceeds to be used for general corporates purposes.

However, due to adverse market conditions, the company announced in June 2018 that it had decided to defer the proposed public offering until such time when market conditions approve. The company’s board had since decided to explore the possibility of partnering with an investor to enhance value through a private planet involving the sale of some of its shares.

The consideration of $130 million represents a price-earnings multiple ratio of Del Monte Philippines of about 15.7 times PE based on the earnings of the company for the financial year ending 30 April 2019 earnings, among others.

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Based on the terms of the deal, the shares shall automatically be converted into ordinary shares of Del Monte Philippines, on the occurrence of either an IPO or trade of private of Sale Shares.

However, if there is no liquidity event after five years from the closing of the proposed sale, the shares shall be redeemed at the redemption price, which is an amount paid on the RCPS plus an 8-percent rate of return calculated from the closing of the Proposed Sale up to the date of redemption.

“The funds that can be raised from the proposed sale will be used for the group’s capital restructuring plans moving forward, especially given that the company was unable to undertake the proposed public offering due to volatile market conditions that show no signs of improving,” DMPL said in its disclosure to the Singapore Exchange.

In addition, the funds raised from the proposed sale will also allow the company to free certain credit lines so as to pursue other opportunities that the company may have. –