Del Monte Foods files for bankruptcy, high-profile company seeks buyer

WALNUT CREEK Del Monte Foods a legendary provider of canned fruits and vegetables has filed for bankruptcy and will scout for a buyer in a strategic quest to stabilize the company s finances All or substantially all of the company s assets will land on the sales block Del Monte Foods stated in an announcement regarding the bankruptcy filing Del Monte Foods revealed that it has billion to billion in debts and the same dollar amount range for its assets according to the company s court filing with the U S Bankruptcy Court in New Jersey This is a strategic step forward for Del Monte Foods Del Monte Chief Executive Officer Greg Longstreet disclosed Del Monte conducted what it indicated was a full evaluation of its strategic options We determined a court-supervised sale process is the majority of effective way to accelerate our turnaround and create a stronger and enduring Del Monte Foods Longstreet reported Certain Del Monte lenders agreed to provide the bankrupt food company with million in financing to help the company get through the Chapter process and the sale efforts Del Monte stated The company was founded in and employs people Del Monte has four plants two in the United States and two in Mexico The Del Monte business has been a cornerstone of American grocery stores for more than years Johnathan Goulding Del Monte s chief restructuring officer stated in a court filing The company has been jolted by selected macroeconomic factors of late Del Monte stated in bankruptcy papers While it is a pioneer in the food production and distribution sector like numerous consumer packaged goods companies Del Monte has experienced changing consumer purchase behavior and increased inflationary costs Goulding commented in a declaration filed with the court Del Monte stated that it saw strong consumer demand for its goods in and The company increased its borrowing to meet that demand and in anticipation of sharply rising demand in Instead of rising in demand drooped last year an outcome that squeezed the company s finances Unfortunately consumer demand declined during fiscal year Del Monte stated in court papers The company s outsized production commitments caused it to incur increased promotional spending to move excess inventory as well as incremental warehousing and logistics costs to manage the surplus inventory Del Monte also faced internal pressures that arose from its debt On top of the market-driven pressures the company has been highly leveraged for a number of years with an average balance sheet dependably exceeding billion in funded debt Del Monte stated in the court filing Interest rate trends created additional problems for Del Monte The sharp rise in interest rates in and increased the company s annual cash interest expense to approximately million Del Monte stated in the court filings That jaw-dropping amount exceeded the company s earnings before interest taxes and other items