Fitch: Del Monte's Ratings Unaffected by StarKist Announcement

Business Wire,  May 16, 2008  

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CHICAGO -- Del Monte Foods Company (Del Monte) announced today that it is exploring strategic alternatives for its StarKist tuna seafood operations. Del Monte has not disclosed the timing of any sale nor the amount or use of potential proceeds if a divestiture were to occur. Fitch rates Del Monte Foods Company and Del Monte Corporation as follows:

Del Monte Foods Company (Parent)

--Long-term Issuer Default Rating (IDR) 'BB'.

Del Monte Corporation (Operating Subsidiary)

--Long-term IDR 'BB';

--Senior secured bank facility 'BB+';

--Senior subordinated notes 'BB-'.

At Jan. 27, 2008, Del Monte's debt totaled approximately $2.1 billion. All of Del Monte's debt was issued by Del Monte Corporation and is guaranteed by Del Monte Foods Company. The Rating Outlook is Stable.

StarKist generates approximately $500 million in annual sales and, with over 35% market share, is the no. 1 brand in the $1.6 billion tuna category. However, a prolonged period of unprecedentedly high raw tuna input costs along with the inability to effectively hedge or offset the higher costs with price increases, due to high price elasticity of demand, has dramatically reduced the profitability of this business.

Given the lower margin commodity nature of the branded tuna business and on-going input cost pressure, Fitch, nonetheless, views a review of strategic options for this business positively. The sale of StarKist could reduce working capital requirements and lessen cash flow volatility. Depending on the amount of any proceeds, using a substantial portion for debt reduction could help strengthen Del Monte's ratings within the rating category. Conversely, significant incremental share repurchases or acquisitions could be negative for the rating.

For the latest 12 month period ended Jan. 27, 2008, Del Monte's credit statistics were modestly weak for the rating category. Total debt-to-operating earnings before interest taxes, depreciation and amortization (EBITDA) was 4.7 times (x), operating EBITDA-to-gross interest expense was 2.9x and funds from operations (FFO) fixed charge coverage was 2.0x.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

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