Del Monte Foods, a household name for its canned goods, has filed for bankruptcy protection and is looking to sell its assets, including several plants. The company also wants to officially exit its California headquarters.
Walnut Creek-based Del Monte, in operation since 1886, filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the District of New Jersey on Tuesday. The company said it is looking for a buyer for some or all of its assets as it restructures its balance sheet. It has secured a commitment for $912.5 million in debtor-in-possession financing, including $165 million in new funding, from some of its lenders. That will provide Del Monte enough liquidity during the sale process to fund its operations, according to the company.
Del Monte is one of the nation's largest producers, distributors and marketers of premium branded food products. Its roster includes Del Monte packaged vegetables and fruit cups, Contadina packaged tomatoes, College Inn broth, Kitchen Basics chicken stock, Joyba beverages and Take Root Organics packaged organic tomatoes. It also produces private-label canned goods for retailers.
Like many other businesses that have filed for Chapter 11 in the past 12 months, in court documents Del Monte said it was overleveraged, faced staggering rises in interest payments, changing consumer habits and was challenged by a difficult economy, including the letdown after the pandemic. The company has already started to downsize its real estate footprint.
A variety of challenges
"One of the most significant challenges has been excess inventory in the wake of the COVID-19 pandemic, which has continued to create operational and financial headwinds," Jonathan Goulding, Del Monte's chief restructuring officer, said in an affidavit. "In advance of the 2023 pack season, the company committed to production volumes based on elevated COVID-era demand levels, which had reached historic highs. After the pandemic subsided, consumer demand decreased, and Del Monte was left with substantial excess inventory that it was forced to variously store, write-off, and sell at substantial losses."
Del Monte currently operates four plants, with two in the United States and two in Mexico, Goulding said, adding that the company's fruit plants are located in California and its vegetable plants are in the Midwest.
Del Monte is a tenant at 42 locations, according to CoStar data. Del Monte didn't respond to an email from CoStar News on Wednesday asking for comment or clarity on what properties it owns or leases.
The company has already taken steps "to reduce overhead costs and improve cost margins as part of a broader pivot towards an 'asset-light' operational structure," according to Goulding. In April 2024, it closed canning operations at its facility at 680 E. John St. in Markesan, Wisconsin, and at 49 E. Third Ave. in Toppenish, Washington, laying off about 215 workers.
In March, Del Monte sold its production facility at 10652 Jackson Ave. in Hanford, California, for $56 million, Goulding said. The company entered into a multi-year lease agreement with the buyer to continue limited run-out operations at the facility through fall 2025.
Headquarters vacated
Del Monte has also begun to market a plant and ancillary facilities it has in Yakima, Washington, Goulding said. Del Monte closed that fruit processing plant and two warehouses at 108 W. Walnut St. in May.
The lease for Del Monte's headquarters at 205 N. Wiget Lane in Walnut Creek expired on May 31, and the company has vacated the premises, according to a court filing. But Del Monte is still seeking court approval to reject that lease "out of an abundance of caution to avoid any potential administrative claims associated with the lease," the filing said.
The company also has offices for an East Coast headquarters at 3 Penn Center West in Pittsburgh.
In 2014, Philippines-based Del Monte Pacific Limited, or DMPL, acquired Del Monte from a group of funds led by private equity firm KKR. The food company remains a closely held, private business owned by its parent, DMPL.
Some of Del Monte's non-U.S. subsidiaries are not included in the Chapter 11 proceedings and continue to operate as usual, according to the company. Del Monte isn't affiliated with Fresh Del Monte Produce.
Greg Longstreet, president and CEO of Del Monte, called the bankruptcy filing a strategic step.
"After a thorough evaluation of all available options, we determined a court-supervised sale process is the most effective way to accelerate our turnaround and create a stronger and enduring Del Monte Foods," he said in a statement. "With an improved capital structure, enhanced financial position and new ownership, we will be better positioned for long-term success."
For the record
Herbert Smith Freehills Kramer and Cole Schotz are serving as legal counsel, while Alvarez & Marsal North America is serving as financial adviser. PJT Partners is the company's investment banker.