CAMPOS-LED Del Monte Pacific Ltd. said it aims to sell another round of dollar-denominated preferred shares over the next two to three years as the company&rsquo s debt-to-equity ratio improves.

Parag Sachdeva, Del Monte&rsquo s chief finance officer, said the recent $200-million preferred share sale improved its debt-to-equity ratio to over three times from the previous six times.

The debt-to-equity ratio indicates how much debt a company is using to finance its assets relative to the amount of value represented in shareholders&rsquo equity.

&ldquo We will reevaluate our capital structure, and in the subsequent years, if we will [sell shares] with this current improvement. But in the next two to three years, we will pretty much do the [offering],&rdquo Sachdeva said. The company has applied for a three-year shelf registration of $360 million in preferred shares. It already issued $200 million.

The shares are offered at $1,000 per share to target retail investors, such as overseas Filipino workers.

Proceeds will be used to repay Del Monte&rsquo s bridge loan to acquire Del Monte Foods Inc., its bigger US unit.

Del Monte has priced its preferred-share sale at a dividend rate of 6.625 percent, payable annually.

These preferred shares would have their dividends paid first before the common shares.

A total of 36-million preferred, cumulative, nonvoting, nonparticipatory and nonconvertible shares had been registered with the Securities and Exchange Commission to be sold at an offer price of $10 apiece.

Its preferred shares, however, were listed at the Philippine Stock Exchange (PSE), but not traded last Friday. Bankers said owners are currently holding on to their shares since it pays dividends.

Del Monte&rsquo s dollar-preferred share sale, trading using the stock symbol DMPA1, is the PSE&rsquo s first dollar-denominated securities that allowed investors with US dollar-deposit accounts to subscribe to the said offering, or trade these since it is listed, to be settled in US dollars.

Del Monte said earlier it will spend $70 million (around P3.5 billion) in capital spending when it starts its 2018 fiscal year in May, mainly to expand its business in the US and other Asian markets.

Luis Alejandro, Del Monte Pacific COO, said the goal of the company is to grow its presence outside of the US, where 80 percent of its revenues come from.

The company, meantime, is also rationalizing its US operations starting this fiscal year.

&ldquo The branded business is 80 percent of the branded business in the US] and 20 percent on the private label,&rdquo Alejandro said.

&ldquo With the branded business play, you will need a very good gross margin. You will channel the gross margin to the advertising and promotion to the brand equity that involves a lot of money. So in order to grow our margin, we are also looking at rationalizing our manufacturing and distribution network,&rdquo he said.

In manufacturing, the company has 12 plants in the US and between 12 to 14 in distribution networks.

Alejandro said it hired a consultant to see how it can rationalize both its plants and distribution networks.

&ldquo So before the end of this calendar year, we will know how to rationalize our network,&rdquo he said.

 

Del Monte Pacific lists first PSE dollar-denominated securities

Del Monte Pacific Ltd. (DMPL) on Friday listed the very first dollar- denominated securities on the Philippine Stock Exchange (PSE).

Del Monte Pacific listed $200 million worth of Series A-1 Preference Shares from March 22 to 28.

" After much anticipation from the market, DMPL' s preference shares were finally made available to the public on March 22, and performed quite well during its limited offering period at 33.3 percent oversubscription," the company said in a statement.

The company offered 15 million Series A-1 Preference Shares at an offer price of $10 per share, and tapped the provision for oversubscription to generate $200 million.

The dollar-denominated preference shares offer a dividend rate of 6.625 percent a year with low investment requirement of $1,000.

Del Monte Pacific tapped BDO Capital & Investment Corp., China Bank Corp., PNB Capital & Investment Corp. and RCBC Capital Corp. as joint lead underwriters for the follow-on offer. BDO Capital was also the sole issue manager.

In December last year, the PSE adopted a framework for listing, trading, clearing and settlement of dollar-denominated securities.

It is the newest investment tool offered by the exchange, which allows listed companies to issue a new set of securities, either common or preferred shares, to be quoted, traded and settled in US dollars.

" The company was unfazed by the need for new rules, new trading platform and back-end infrastructure of brokerage firms and the learning curve that stakeholders need to go through to accept this new instrument," Del Monte noted.

The Board Lot Table for dollar-denominated securities trading was adjusted from its peso counterpart to make the minimum lot sizes more affordable to investors.

The table determines the minimum number of shares an investor may buy or sell at a specific price range. &mdash Ted Cordero/VDS, GMA News


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