Del Monte Foods is filing for bankruptcy protection after failing to attract consumers to its canned products due to a shift towards healthier options. The company has secured $912.5 million in debtor-in-possession financing. Despite some sales growth in other brands, the decline in signature products remains significant. Factors like grocery inflation and tariffs on imported steel are contributing to increased costs. The bankruptcy is part of a planned sale of the company’s assets, following a recent lawsuit settlement related to its debt restructuring.
"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," CEO Greg Longstreet said in a statement.
"Consumer preferences have shifted away from preservative-laden canned food in favour of healthier alternatives," said Sarah Foss, global head of legal and restructuring at Debtwire, a financial consultancy.
Del Monte has secured $912.5 million US in debtor-in-possession financing that will allow it to operate normally as the sale progresses.
The new U.S. tariffs on imported steel are expected to push up the prices Del Monte and others must pay for cans.
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