Del Monte Cans Pending Sale to Mexico Investors

Del Monte Foods Co. said it scrapped its pending sale to an investor group led by Carlos Cabal Peniche, who is on the run from Mexican authorities.

The group had pledged to buy San Francisco-based Del Monte for $277 million in cash and more than $630 million in debt.

Under the terms of the sale agreement, Del Monte is keeping $30 million it had received through a letter of credit, because the transaction didn’t close before Sept. 19.

Del Monte is one of the world’s largest processors of fruits, vegetables, tomatoes and snack foods. It has operations in Mexico, Central America and the Philippines and reported fiscal 1994 sales of $1.6 billion.

Among the closely held company’s owners are Merrill Lynch & Co. and Citicorp. Del Monte Foods isn’t affiliated with Del Monte Europe, Del Monte Far East or Fresh Del Monte Produce of Coral Gables, Fla.

Mexican authorities can’t find Cabal Peniche, but they have seized Grupo Financiero Cremi-Union, which he leads.

Cabal Peniche, 41, authorized $200 million to $700 million in fraudulent loans to himself, and used the funds to buy controlling interests in other companies through shell companies, the Mexican Finance Ministry alleges.

Those loans were used to mount the Del Monte takeover offer in April and for Cabal Peniche’s $550-million purchase of Fresh Del Monte Produce, officials said.

At least nine people have been arrested in the scandal, seven from Banco Union and two from Arrendadora Pragma, two subsidiaries of Grupo Cremi-Union, according to the Mexican attorney general.