Moody's rates Del Monte loans B2, Caa1

Moody's Investors Service said it assigned a B2 corporate family rating and B2-PD probability of default rating to Del Monte Foods, Inc., an entity formed by Philippines-based Del Monte Pacific Ltd. to facilitate its acquisition of the consumer products business of unaffiliated San Francisco-based, Del Monte Corp. for $1.7 billion.

Moody's also assigned ratings to $930 million of proposed debt securities being raised to fund the transaction, including B2 on a proposed $650 million seven-year senior secured first-lien term loan and Caa1 on a proposed $280 million 71/2-year senior secured second-lien term loan. A $350 million five-year asset backed revolving credit facility also being arranged by Del Monte Foods will not be rated by Moody's.

The outlook is stable.

Moody's said the B2 rating reflects Del Monte Foods's high proforma financial leverage, along with declining sales volumes and heavy price competition in the core U.S. packaged fruit and vegetable categories. The rating is supported by the strength of the Del Monte brand that holds a leading share in these categories.

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