UK: Premier brushes off share issue speculation

By Dean Best | 23 December 2013

Premier Foods, the UK group behind brands including Hovis bread and Mr Kipling cakes, has sought to play down speculation of a rights issue in the New Year. 

Reports in the UK claimed Premier will look to raise funds to bring down its debt and fend off US private-equity group Apollo Management, which is said to have bought up GBP100m in the company's loans.

Premier has offloaded a number of assets in recent years, including brands such as Quorn, Sarson's vinegar and Branston pickle. However, some in the City are still concerned about the amount of debt on the company's balance sheet.

In response to the speculation, Premier made a statement to the London Stock Exchange today. "Premier Foods plc notes the recent comments in the press regarding a potential capital restructuring. The group's bank debt and revolving credit facilities are in place until mid-2016. As previously stated in the group's half-year results in July 2013, the board continues to review the full range of options available to the Group regarding its future capital structure. The group confirms that this review is ongoing and, while it includes the possibility of a rights issue, no decisions have been made at this stage," the statement read.

Premier has been holding talks with private-equity firms to secure backing for its Hovis bread unit, which would be run separately.

Its bread sales have come under increasing pressure in a relatively promotional UK bread market. In its most recent quarterly update, Premier said its bread unit saw sales dip 1.5%, again affected by the hot weather.

The company has been restructuring the division in a bid to boost profitability and last year Premier said it would cut 900 jobs, close over 100 distribution routes and revamp its logistics operation. Premier has closed bakeries in Greenford and Birmingham as well as its Glasgow mill this year.

Premier declined to comment when contacted by just-food today.

Sectors: Bakery, Canned food, Condiments, dressings & sauces, Dairy, Financials, Private label, World foods

Companies: Premier Foods plc

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