City welcomes Premier’s transformation

- Last updated on GMT

Grocery brand sales grew by 2%
Grocery brand sales grew by 2%

Related tags: Bread, Hovis, Premier foods

News that Premier Foods had concluded a major refinancing deal has been well received by the City, with analysts suggesting it heralds a much brighter future for the ambient-branded food business.

City analysts said the capital restructuring plan would put the company on a much firmer footing than it has been for many years. It was organised with the help of adviser Ondra Partners and revealed as Premier’s chief executive Gavin Darby reported 17.7% growth in trading profit to £145.2 for 2013 financial year.

In its results for the year, sales in the underlying business, excluding milling, were up by 1.1% to £1,282.5M, while grocery brand sales grew 2% to £543.5M. Adjusted profit before tax rose to £86.8M and net debt was cut by £120M to £831M at the end of last year.

£161M

The refinancing plan includes an underwritten equity issue of £353M, £500M of senior secured loan notes and a simplified £272M retained cash flow, together with a pension scheme agreement that reduces Premier’s cash contributions by £161M.

The news came after Premier’s announcement in January of a £87.5M joint venture with the US-based Gores Group to run its Hovis bread and flour business.

Shore Capital analysts Clive Black and Darren Shirley, described the “transformational deal​” in glowing terms, noting “management can now press on with running a high-margin branded grocery business, where we expect solid growth and a return to dividend payments”.

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