Premier Foods’ debt deal a step forward

Rumours are rife that the owner of brands such as Ambrosia custard and rice pudding and Mr Kipling cakes is poised to announce a major refinancing package.

Last week’s statement was not that, but Investec analyst Nicola Mallard believed it was part of the company’s wider financial plans. “We think it is the forerunner to a wider ranging refinance, possibly including an equity fund raise,” ​she told FoodManufacture.co.uk.

The reorganisation of its ‘Receivables Securitisation Agreement’ entails increasing the size of the programme from £100M to £120M, cutting the interest margin and extending the scheme’s terms.

New terms​

The new terms run until the end of September 2015, with the option of further extension to the end of 2016. The previous agreement was set to expire in March next year.

One industry source said, given Premier Foods’ debt levels, still reckoned to be around the £850M mark, this latest development was “routine day-to-day stuff”.

Another was more positive, but still guarded: “It’s a step in the right direction, but management will recognise there is a lot more to do to reduce pressure on the business and ease the concerns of shareholders.”​

Meanwhile, there was no immediate news on progress regarding talks to sell Premier Foods’ bread business.

PAI Partners​

However, FoodManufacture.co.uk understands private equity firm PAI Partners has tabled a strong bid and is emerging as a front runner at the moment.

“PAI appears to be in the frame,”​ said a source. “Premier’s agenda is to get a deal done on the bread business early in the New Year.”​

Premier Foods issued a statement today (December 23) noting press comments about a potential capital restructuring.

The firm said its bank debt and revolving credit facilities were in place until mid-2016. “As previously stated in the group's half-year results in July 2013, the board continues to review the full range of options available to the group regarding its future capital structure,” ​said the statement.

“The group confirms that this review is ongoing and, while it includes the possibility of a rights issue, no decisions have been made at this stage.” ​

In November Premier Foods won the coveted title Food manufacturing company of the year​ in the Food Manufacturing Excellence Awards. It also won two other awards: Ambient food manufacturing company of the year and Training programme of the year.