Premier Foods: looks to cut crippling debt

London / UK. (pf) Premier Foods PLC, which makes household names like Hovis bread, Mr Kipling cakes and Bisto, is seeking to refinance, the «Sunday Telegraph» said. Britain´s biggest food firm, which employs around 18’000 people across the Kingdom, was said to be working to secure a major capital injection worth several hundred million GBP. Premier Foods, which has debts of 1,8 billion GBP, was claimed to be in detailed talks with CCMP Capital, formerly the private equity arm of JP Morgan.

The Sunday Telegraph said the company had turned to prospective investors because the current climate made it difficult to refinance existing debt. The move would enable it pay down some of the debt pile. The company’s share price has fallen sharply amid concerns about the level of debt on its balance sheet after recent mergers with RHM and the UK arm of Oxo and Homepride company Campbell´s Soup. The impact of higher commodity prices on its working capital, and lower proceeds from property sales have also impacted on the debt position.

However, the group said in July that it met its financial covenant tests at the end of June and that it expects to continue to operate within them. A spokesman for Premier Foods said to the Telegraph: «The group has been approached by several parties with proposals in line with this stated priority. The group is examining these proposals amongst other options and a further statement will be made as and when appropriate».