The heavily indebted UK food group Premier Foods is eyeing an injection of cash – possibly from private equity investment coupled with a rights issue – with a view to reducing its debts of GBP1.8bn (US$2.7bn).
According to a report in The Times, Premier is looking to sell about 40% of the company to private equity and hedge fund investors while simultaneously launching a rights issue to existing shareholders in order to raise a total of around GBP300m.
While Premier confirmed that it is in negotiations with possible investors, a spokesperson for the group declined to comment on the specifics of the talks.
“Strategically, Premier has made it a priority to accelerate a reduction in overall debt,” a spokesperson for the company told just-food. “The company is looking at a range of options to raise capital.”
just-food understands that Premier is also in negotiations with its lenders over altering the terms of its loan agreements.
The company reportedly wants banks to relax its interest-cover covenant, requiring earnings to be sufficiently high to cover interest payments, in return for paying down its debt.