Premier Foods plc has moved to reassure investors over the company’s high level of debt by confirming that it is reviewing a “range of options” to raise capital.
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The UK food group said today (15 December) that, among the options on the table, is a cash injection from investors and that it had held talks with parties over possible investment.
“Premier is reviewing a range of options to accelerate the reduction of group debt in order to establish a more appropriate long-term capital structure,” the company said in a regulatory statement this morning.
“Premier confirms that, as part of this review, it has held preliminary discussions with a number of its investors and certain other parties regarding a possible investment in Premier. These discussions remain at an early stage,” the company said.
The company declined to indicate which parties have been involved in negotiations.
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By GlobalDataAccording to the Financial Times, Premier is looking to raise GBP200-300m. However, the company said: “Premier has made no decisions regarding the size or structure of the options.”
Premier’s debt stands at GBP1.7bn (US$10.43bn), primarily the result of its 2006 acquisitions of Campbell’s UK and Irish business and RHM. With the crisis in the credit markets, Premier has come under increasing pressure to improve its balance sheet and concerns over the group’s high level of debt have depressed its share price.
just-food understands that the group has made it a priority to accelerate debt reduction since global economic conditions took a turn for the worse this year. Premier has said that it is looking at a range of options to cut debt, including disposals.
A spokesperson for Premier told just-food last month that the company would consider selling off non-core business to raise capital.
However, Premier has already turned down an unspecified number of offers for various parts of its business, including a GBP250m bid for its Mr Kipling brand from McVitie’s maker United Biscuits.
Premier shares lifted slightly in morning trade following the announcement, rising 1.9% to 26.75 pence at 11.22am (GMT). However, over the last four months, shares in the group have lost about three-quarters of their value.
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Premier is due to provide a trading update on 13 January.
