Del Monte Pacific Ltd. disclosed to the Philippine Stock Exchange that its U.S. subsidiary, Del Monte Foods, Inc. (DMFI), has reached a settlement with a group of lenders who had filed suit in the Delaware Court of Chancery over alleged defaults under a 2022 loan agreement.
Beyond settling the legal dispute, the agreement raises both debt and interest expenses for the group and includes a critical provision: Del Monte must inject fresh capital into the affected entities. Failure to do so would allow lenders to appoint directors to company boards and implement governance changes.
The dispute arose from the 2022 DMFI Facility Agreement, dated May 16, 2022. In October 2024, lenders who opted out of a later refinancing deal sued DMFI, two affiliates of its parent company, Del Monte Foods Holdings Ltd. (DMFHL), and several directors. They alleged that events of default had occurred and sought to replace current board members with their own appointees.
Del Monte strongly denied the allegations and contested the claims. A trial was held in February, with a post-trial hearing set for April 9. However, the parties reached a settlement before the hearing.
As part of the agreement, all debt under the 2022 facility will be retired, and the lawsuit has been dismissed with finality.
To fund the settlement, a DMFHL subsidiary obtained an incremental first-out loan from select lenders under the New Term Facility. While this resolves the dispute, it increases the Del Monte Pacific Group’s annual interest expense by approximately USD4 million and raises its total debt by USD20 million.
Del Monte has until May 5 to inject capital—via equity or a subordinated loan. A failure by Del Monte to comply would empower lenders to appoint majorities on the boards of DMFHL and its subsidiaries, and a portion of Del Monte’s equity in DMFHL would be applied to partially repay the Settlement Loan.
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