Premier Foods is close to agreeing new bank loans that could secure the future of the Hovis maker, according to reports.

Royal Bank of Scotland and Lloyds are among the lenders said to be looking at renewing the firm’s GBP1bn of loans, extending the Mr Kipling makers repayment deadline for a further three years, the Sunday Times reported yesterday (26 February).

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The UK’s largest food manufacturer, which also produces brands such as Ambrosia, announced the closure of its Eastleigh bakery last week as part of “ongoing efforts to improve the utilisation and cost effectiveness of the Hovis supply chain”.

Faced with high debts and in the wake of two profit warnings in 2011, the UK’s largest food maker, under new CEO Michael Clarke, has been offloading assets to strengthen its balance sheet and looking to refocus the business.

A spokesperson for Premier Foods declined to comment on the details of the discussions with its lenders, but told just-food: “It is no secret that Premier Foods has been in talks for refinancing for the last six months. The company will update the market relatively soon.”

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