S&P: Del Monte unaffected

Standard & Poor's said that there would be no immediate effect on the ratings and outlook on Del Monte Foods Co. (BB-/positive/B-1) following the announcement regarding the board of directors' authorization for the company to acquire up to $125 million of common stock.

It is expected that it will take about 18 months to complete the share repurchase, which will be funded out of cash on hand ($146 million as of May 1, 2005) and cash from operations. In addition, Del Monte announced weaker-than-expected results for the fourth quarter ended May 1, 2005 due to higher commodity costs and a number of one-time expenses related to integration costs, higher expenses from its third-quarter debt refinancing, and the one-extra week in fiscal 2004.

However, on an adjusted basis, Del Monte's credit measures remain adequate for the current rating, and the company is expected to apply its free cash flow to debt reduction and reduce leverage to below 2.5x within the outlook period.

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