* IPO would be Philippines&rsquo largest since October 2016

* Share sale would be SE Asia&rsquo s biggest for F& B since 2012 (Adds fund manager comments, milestones, background)

By Neil Jerome Morales
  

MANILA, Feb 6 (Reuters) - The Philippine unit of Del Monte Pacific Ltd said on Tuesday it plans to go public and raise up to $324 million this year, in what would be the country&rsquo s largest food and beverage initial public offering (IPO) on record.

Del Monte Philippines Inc&rsquo s planned sale of a fifth of its shares would be the country&rsquo s biggest IPO in 15 months and Southeast Asia&rsquo s largest for a food and beverage firm in nearly six years.

The announcement comes as domestic demand for consumer goods remains strong despite the prospect of rising prices due to higher taxes on fuel.

Del Monte Pacific said it sought for the Securities and Exchange Commission' s approval of Del Monte Philippines' IPO, partly to pay existing loans. (bit.ly/2GSJzA4)

Del Monte Philippines will sell 559.46 million shares, or 20 percent of outstanding shares, at a maximum price of 29.88 pesos each, the company said in a disclosure to the Philippine and Singapore stock exchanges, where its parent is listed.

The majority of the IPO proceeds will be used to pay existing loans while remaining capital will be allotted for expansion.

&ldquo The prepayment of such loans will allow the Del Monte Pacific Group to de-leverage and strengthen its balance sheet,&rdquo the company said.

Del Monte Philippines hired BDO Capital & Investment Corp as the issue manager, sole global coordinator and sole bookrunner.

It would be the Philippines&rsquo largest IPO since Pilipinas Shell Petroleum Corp&rsquo s $380.79 million share sale in October 2016.

For the food and beverage sector, it would be the Philippines&rsquo biggest on record and the largest in the region since Felda Global Ventures Holdings Bhd&rsquo s $3.27 billion IPO in June 2012, Thomson Reuters data showed.

Del Monte Philippines produces and exports fruit juices, packaged pineapples and mixed fruits, and various tomato and spaghetti sauces under the Del Monte brand. Its parent firm, Del Monte Pacific, is listed on both the Philippines and Singapore bourses.

&ldquo Business-wise, they are still one of the leaders in their segment,&rdquo said Steven Kent Ko, fund manager at Rizal Commercial Banking Corp in Manila.

However, higher taxes could challenge Del Monte Philippines in the coming years, Ko said. Allotting most of the proceeds for debt payment makes the IPO less attractive, he added.

The Philippines&rsquo broader share price index is up 0.67 percent year-to-date, trailing its Southeast Asian peers.

SINGAPORE (June 2017): Del Monte Pacific reported a 57.2% fall in FY17 earnings to US$24.4 million ($33.8 million) from US$57 million a year ago.

This was due to the one-time net gain of US$31.7 million mainly from Del Monte Food Industries&rsquo retirement plan amendment and working capital adjustment last year.

Meanwhile, FY17 results included the US$21.1 million of one-off expenses that were primarily severance, closure of North Carolina plant, and write-off of deferred tax assets.

Excluding one-off items, earnings would have grown 80.1% to US$45.5 million.

For the full year, revenue fell 0.9% to US$2.25 billion from US$2.27 billion a year ago.

Del Monte Food Industries generated US$1.7 billion or 75.3% of group sales. This was lower by 4.6% versus prior year due to the impact of unsuccessful low-margin US Department of Agriculture bids from the second half of FY2016 plus reduced sales in private label and foodservice business lines following closure of the North Carolina plant.

There was an overall 6.2% increase in the Philippine market sales in peso terms, which was driven by strong momentum across major categories of packaged fruit, beverages and culinary driven by an expanded user base and expanded household penetration supported by new advertising campaigns and consumer communication.

Sales of S& W branded products in Asia rose double-digit versus last year on higher sales from both the fresh and packaged segments. This was driven by improved distribution and expansion in Asia through partnership and other initiatives.

Del Monte Pacific have declared dividends of 0.61 US cents per share for FY17, compared to 1.33 US cents declared a year ago.

The group said it expects its US business to improve its financial performance through procurement synergies and transformation, footprint rationalisation and optimisation of G& A (general and administrative) costs through the multiyear restructuring initiative that started in FY2016.

In the mid-to-long term, it said it would continue to strengthen its core business and develop new products in the US to unlock the growth potential of its products and brands.

The group expects its FY2018 financial performance to improve.

Shares in Del Monte Pacific closed at 34 US cents on Thursday. 

Thursday, June 29, 2017 - 19:01