Del Monte Pacific Faces PSE Trading Suspension After Audit Disclaimer Linked to U.S. Subsidiary Bankruptcy

Key Developments Impacting Shareholders and Share Price

Del Monte Pacific Limited (DMPL), a major player in the food and beverage sector, has been hit with a suspension of trading on the Philippine Stock Exchange (PSE) after its latest annual report for FY2025 received an audit disclaimer. The audit disclaimer is directly tied to the company’s U.S. subsidiary, Del Monte Foods Holdings Limited (DMFHL), which is currently undergoing Chapter 11 bankruptcy proceedings in the United States.

What Triggered the Suspension?

• Audit Disclaimer: The independent auditors were unable to obtain sufficient evidence related to the recoverable values of the assets and liabilities of DMFHL due to the ongoing U.S. Chapter 11 process. This led to a disclaimer of opinion on DMPL’s FY2025 annual financial statements.
• Classification of U.S. Assets: The assets of DMFHL have been classified as “assets held for disposal” and presented as “discontinued operations” in the company’s financial statements.
• Automatic Suspension: According to PSE rules, an audit disclaimer in the audited financial statements is an automatic ground for suspension of trading in the company’s shares.

Implications for Shareholders

• Value of U.S. Business Written Off: DMPL has already fully impaired its investment and other assets related to DMFHL. This means that the value of the U.S. business has been effectively written off in the company’s books.
• Discontinued Operations: The audit disclaimer and related uncertainties pertain solely to the discontinued U.S. operations and do not affect the continuing operations of DMPL. The continuing operations’ financials remain reliable.
• Residual Risks Disclosed: All remaining risks associated with DMFHL and the Chapter 11 process have been fully disclosed by the company.
• Singapore Exchange Not Affected: The Singapore Exchange (SGX), where DMPL has its primary listing, does not automatically suspend trading under similar circumstances. Thus, the shares continue to trade actively on the SGX.
• Company Seeks PSE Waiver: DMPL has filed a waiver request with the PSE to lift the trading suspension, highlighting that the disclaimer only affects discontinued U.S. operations and that these have already been deconsolidated from group accounts effective 1 May 2025.

Why This Matters for Investors

• Potential Share Price Impact: The PSE suspension could create uncertainty and volatility in DMPL’s share price, especially if the waiver is not granted promptly.
• Transparency and Risk Management: The company’s proactive impairment of U.S. operations and full disclosure of residual risks may provide some reassurance to investors concerned about further financial fallout.
• Ongoing Business Stability: The unaffected status of continuing operations and ongoing trading on the SGX suggest that the core business remains stable, which might help to mitigate negative sentiment from the U.S. subsidiary’s bankruptcy.

Summary

The suspension of Del Monte Pacific’s shares on the PSE due to an audit disclaimer linked to its bankrupt U.S. operations is a significant, potentially price-sensitive event. Shareholders should monitor developments closely, particularly the outcome of the company’s request to lift the suspension and any further disclosures relating to the U.S. business. The primary impact is the removal of U.S. operations from the group’s financials, with the company emphasizing that its continuing business remains unaffected and reliable.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors are advised to conduct their own due diligence and consult with professional advisors before making any investment decisions. The situation described is evolving, and information may change rapidly.

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