Premier Foods plc has secured a deal to refinance its debts that could secure the future of the Hovis maker, it announced today (12 March).

The UK's largest food manufacturer, which also produces brands such as Ambrosia, Mr Kipling and Bisto said it agreed a four-and-a-half year refinancing package that will allow it push ahead with its new growth strategies.

Faced with high debts and in the wake of two profit warnings in 2011, Premier, under new CEO Michael Clarke, has been offloading assets to strengthen its balance sheet and refocus the business. However, the need to refinance its debts had put left a cloud over Premier's future and had weighed on its shares.

Under the terms of the refinancing package, banking facilities of GBP1.2bn (US$1.87bn) have been extended from December 2013 to June 2016. Covenants have also been re-set to reflect Premier's plan to focus investment behind eight 'power brands', as well as reduce costs and offload selected businesses.

The total interest rate swap portfolio, including previously restructured swaps, will be restructured into an additional term loan of around GBP200m. Additionally, the trustees of the group's pension schemes have agreed to defer deficit contribution payments until 2014.

The refinancing package is subject to the formalities of final documents being signed which are expected by the end of the month, the company said.

Premier reiterated that it expects overall financial results for 2011, both reported and underlying, to be at the lower end of market expectations and that its current focus continues to be to "stabilise the business and invest in its recovery and future growth".

The company said it will provide further details on the refinancing packaging and its growth strategies when it announces its full-year results at the end of the month.