Premier Foods declines to comment on bank deal

By Dan Colombini

- Last updated on GMT

Related tags: English-language films, Stock, Premier

Premier is focusing on its Power Brands ahead of any deal with its banks
Premier is focusing on its Power Brands ahead of any deal with its banks
Premier Foods has refused to comment on speculation that it has agreed a new deal with its lenders after the firm’s share price rose 6.5% to 12p yesterday (28 February).

The news follows reports inThe Sunday Times, which claimed Premier was on the brink of agreeing the deal after Royal Bank of Scotland and Lloyds agreed to renew £1bn of loans.

The banks had also agreed to extend Premier's repayment deadline for a further three years, beyond the current 2013 deadline, according to reports.

Rise in share price

But a spokesman for Premier Foods declined to comment on the validity of the claims. He also told FoodManufacture.co.uk that the rise in share price may have been a result of the story, and subsequent press reports.

The banks will now ask that the proceeds of several disposals be used to repay some of the firm’s debt before the new 2016 deadline, the reports have claimed.

Premier has recently overseen the successful disposal of the Brookes Avana business to Ranjit Boparan’s 2 Sister’s Food in a £30M deal in December last year.

This was followed by the sale of the firm’s Irish businesses to the Boyne Valley Group later that month.

The firm’s spreads division, which includes Hartley’s jam, is also up for sale and being widely touted as the next business to be sold.

FoodManufacture.co.uk reported that Premier’s banks would demand disposals at the firm following an agreement with its lenders in December last year.

Long-term financing

Speaking at the time, one analyst, who asked not to be named, said: “Their priority is coming up with long-term financing with the banks and the resetting of covenants. In order to do that the banks will be demanding that they do make disposals.”

But Last week, Graham Jones, an analyst at Panmure Gordon, warned that striking a balance between disposals and tackling its pension debt would be vital for Premier’s recovery.

He said: “If you continue with disposals and continue to have pension debt, which is what Premier has, then you end up with an ever decreasing cash generative business.”

Experts also revealed that Premier’s focus on its eight Power Brands would be the key to securing bank confidence ahead of any future deal.

Jones said he believed the firm would fail the upcoming covenants test, but stressed that he expected a deal to occur to prevent that from happening.

He told FoodManufacture.co.uk: “The covenants test will be failed, as it was in December. I th

Related topics: Chilled foods

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