First Milk is looking to increase investment in the business as a result of a GBP130m (US$211m) financing deal it has struck with Lloyds TSB and Barclays.
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The joint-lead finance package provides a more “flexible approach” to lending, will offer First Milk an additional GBP30m in funding and will increase as volumes and milk prices grow, First Milk finance director Jim Maguire said.
A spokesperson for First Milk said that the group planned to invest the extra funding into its brands.
Branded sales are expected to total 20% of sales this year, up from 5% last year. “Clearly we need to put money behind our brands,” the spokesperson said.
In order to support growth, the farmer-owned cooperative also intends to invest in expanding its processing network.
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By GlobalDataMoreover, First Milk’s moves to take the retailer own-label business it bought from Dairy Crest in 2006 away from mild towards mature cheddar has meant the group needs to hold stock for longer.
The extra capital will allow the group to address working capital issues that this move has raised, the spokesperson revealed.
