Del Monte Pacific Ltd. expressed confidence it could timely and effectively manage its financial obligations after the Singapore Exchange Securities Trading Ltd., or SGX, raised concerns about its current liabilities exceeding the amount of its current assets by USD417.3 million and other financial indicators.
Del Monte Pacific is a branded food manufacturing company that is listed in both the Singapore and the Philippine Stock Exchange.
SGX noted several financial indicators, including high debt ratios and incurred losses, that raised the question on whether Del Monte Pacific’s “current assets are adequate to meet the company’s current liabilities of USD1.80 billion.”
The company reported that the net debt increased to USD2.28 billion in its financial year ended 30 April 2024 from USD2.25 billion in the year-earlier period while gearing also increased to 8.9 times from 5.8 times. It also reported cash and cash equivalents of USD13.1 million, way below the reported debt. The company also incurred losses of USD81.2 million in the last financial year.
Del Monte Pacific said, however, that it is undertaking strategic measures to ensure positive cash flow generation and improve cost management as well as initiate discussions for refinancing of existing debts to address financial obligations and sustain operation.
The company said it has received proposals from reputable financial institutions for new long-term loans, which are expected to provide additional liquidity. It added that banks have extended incremental short-term credit lines to help meet immediate financial obligations, ensuring adequate working capital to fulfill operational needs.
Even with last year’s loss, Del Monte Pacific noted that it has generated positive cash flow from operations amounting to USD373.4 million for the year.
For this year, the company said it has outlined priorities, including continuing efforts in the US to reduce inventory levels; implementing measures to reduce waste and minimize inventory write-offs across the Group; streamlining warehousing and distribution costs in the US; and consolidating manufacturing operations in the US to optimize efficiency.
The company also plans to enhance planning processes through digitization and ensuring clear organizational accountability across the group; restore productivity for the processed pineapple variety over the next 12 to 24 months; and rightsize the workforce and reducing fixed costs to improve overall cost structure.
Del Monte also said payments on certain debts are being made daily to increase availability under an asset-back loan arrangement, with only a fraction estimated to be settled within the next 12 months.
The company said the group has also engaged financial advisors to assist and advise on the sale plans, including, but not limited to, sale of assets, injection of equity through strategic partnerships and/or private placement. Proceeds from the transactions will be used to lower leverage.
