Research Update: Del Monte Foods Inc. Upgraded To 'CCC+' From 'SD' Following Debt Buyback, Outlook Negative

U.S.–based Del Monte Foods Inc.'s (Del Monte) parent, Del Monte Pacific Ltd. (DMPL), has repurchased a portion of its second-lien term loan for less than par through a trust entity. The full $260 million will remain on Del Monte's balance sheet. We are raising our corporate credit rating on Del Monte to 'CCC+' from 'SD' (selective default) because the company's debt leverage and liquidity have modestly improved following the reduction in its asset-based lending (ABL) borrowings and the extension of the facility's maturity. We do not envision a default occurring within the next 12 months. However, the company's debt leverage remains high at more than 10x. At the same time, we are raising our issue-level rating on the first-lien senior

...+ U.S.¡based Del Monte Foods Inc.'s (Del Monte) parent, Del Monte Pacific Ltd. (DMPL), has repurchased a portion of its second-lien term loan for less than par through a trust entity. The full $260 million will remain on Del Monte's balance sheet. + We are raising our corporate credit rating on Del Monte to '###+' from '##' (selective default) because the company's debt leverage and liquidity have modestly improved following the reduction in its asset-based lending (ABL) borrowings and the extension of the facility's maturity. We do not envision a default occurring within the next 12 months. However, the company's debt leverage remains high at more than 10x. + At the same time, we are raising our issue-level rating on the first-lien senior secured term loan to '###+' from '###-'. We are also affirming our 'D' issue-level rating on the second-lien term loan because we expect DMPL to continue to attempt to repurchase this debt at a discount to the original principal. + The negative outlook...

Research Update