Premier Foods: Warburg Pincus buys 10,3% slice

London / UK. (pf) Premier Foods PLC posted a wider loss in 2008, impacted by higher charge relating to fair valuation of interest rate swaps and goodwill impairment charge, among others. In addition, the Hovis bread maker announced suspending its dividend, and raising a capital of about 379 million GBP, net of expenses, accompanied by an investment from private-equity firm Warburg Pincus.

2008 Annual Results

• H2 Group turnover for continuing operations up ten percent.
  • Grocery division in good volume growth for last four months of the year.
  • Hovis brand relaunch increased market share by 2,4 percent to 24,7 percent.
• H2 Trading profit for continuing operations up 11,7 percent.
• Annual cost synergies remain on track for the full 113 million GBP.
  • 53 million GBP delivered in 2008.
  • Run rate at 31 December 2008 of 89 million GBP.
• Manufacturing rationalisation programme completed – nine factories closed over 12 months.
• Disposal of Le Pain Croustillant, Sofrapain and Martine for 47 million GBP.
• Capital structure solution: equity issue raising approximately 404 million GBP of gross proceeds combined with amended bank agreement and pensions framework agreement.
• Impairment of goodwill in relation to Hovis division of 194 million GBP due to increased cost of capital.
• Non-cash charge of 219 million GBP on mark-to-market of interest rate swaps due to unprecedented fall in market expectations for Libor.

In addition, the company said its board has decided not to propose any dividend for the year ended December 31, 2008. Premier Foods stated that future payment of dividends would be dependent upon the group’s ability to reduce its level of debt, the limitations on dividends imposed by the group’s proposed amended debt agreements and the condition of the credit markets at the relevant time.

Complete statement

Premier Foods PLC Annual Results 2008 – Business trading well – adjusted earnings per share from continuing operations up 5,4 percent – Transformation nearing completion – competitively positioned for the future – Capital structure solution – 404 million GBP equity issue combined with renegotiated bank agreements and pensions framework agreement (PDF | 78 pages| 539 KB).