Moody's may cut Del Monte

Moody's Investors Service said it placed the ratings of Del Monte Corp., including its Ba2 corporate family rating, on review for possible downgrade following news that it has entered an agreement to sell itself to an investor group led by funds affiliated with Kohlberg Kravis Roberts & Co. LP, Vestar Capital Partners and Centerview Partners.

The review reflects an expectation that the transaction will result in higher leverage and possibly a more aggressive business strategy, Moody's said.

The transaction reportedly calls for a $19.00 per share ($4 billion) cash payment to shareholders and the assumption of $1.3 billion in net debt, valuing Del Monte at about $5.3 billion, the agency said.

While details of Del Monte's final capital structure will not be known until the solicitation process is completed, the agency said it expects that the amount of incremental debt will be significant.

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