Premier Foods shells out?£167m to simpify debts

HOVIS and Mr Kipling owner Premier Foods has taken another step to simplify and reduce its debt pile, it announced yesterday, after agreeing to pay £167m to end derivatives contracts linked to interest rates.

The company said yesterday the swaps from 2007 and 2008 could have meant a £450m fee if interest rates changed. The termination cost will be spread between now and 2013, it said.

Premier said the restructuring paves the way to seek a credit rating with a view to raising funds in the bond market. The firm added that it still has ample headroom for its debt covenants.

The company laid out its plans to reduce debts in August, and has since ended its final salary pension scheme and fielded bids for the Quorn brand and the rest of its non-meat business.

Chief financial officer Jim Smart said the restructuring is “an important step in delivering a more stable financial structure”.