UK: Premier details refinancing plan, books 2013 profit fall
Premier reported higher sales from its core brands in 2013
Premier Foods plc today (4 March) detailed how it plans to recapitalise its balance sheet as it booked a drop in full-year sales and profits this morning.
The UK group said it will issue GBP353m (US$588.7m) in new shares to raise capital. The Ambrosia custard and Bisto gravy maker is also set to issue bonds it says will raise proceeds of GBP475m. The company said it had also secured a GBP300m revolving credit facility.
The capital injection will allow Premier to tackle its high debt levels. Premier ended 2012 with net debt of around GBP890m and a pension deficit totalling GBP394.7m. Over the past year, the company said initiatives to reduce "complexity" and a "disciplined approach" to its cost base allowed it to cut debt by GBP120m.
Cheif executive Gavin Darby said: "This new capital structure will liberate Premier Foods from its past and provides a great platform on which to execute our category based strategy."
The company moved to "simplify" its structure by forming a joint venture company for its Hovis bread business with private-equity firm Gores Group earlier this year. In 2012, Premier sold off a clutch of non-core brands such as Branston pickle and Hartley's jam.
Premier has targeted greater sales of its higher-margin "grocery power brands", which include Lloyd Grossman sauces, Bisto gravy and Mr Kipling cakes.
The group saw sales of these key brands rise 2% in 2013, climbing to GBP543.5m. However, total underlying sales - excluding the milling business - were down 1.1% in the year, falling to GBP1.28bn. Sales from continuing operations, excluding the impact of disposals, fell 20.1%, Premier added.
Operating profit fell to GBP52.6m, down from GBP83.7m in 2012. The group racked up a net loss of GBP245.9m, up from a loss of GBP17.9m in 2012. The net loss was deepened by higher losses from discontinued operations, which rose to GBP199.2m.
Trading operating profit from continuing operations was also down - dipping 12.3% to GBP135.9m in 2013. However, the company emphasised it saw a strong increase in underlying operating profit, which rose 17.7% year-on-year to GBP145.2m.
Click here for the full release for Premier or check back for further coverage from the group's conference call with management.
Companies: Premier Foods plc
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