Premier offloads grocery unit for £182m

Britain's largest food producer Premier Foods has agreed to sell its canned grocery operations to Princes for £182m, further cutting the group's debt.

As a predominantly non-branded business the canned grocery operations had not been an area of focus for the firm.

"Combined with the proposed disposal of our meat-free business, we will have delivered total gross proceeds of £387m, significantly accelerating the delivery of our financial strategy," said chief executive Robert Schofield.

Premier said the effect of the sale would be to reduce its average debt/EBITDA ratios by around 0.2 times, making a further contribution towards reaching the target leverage ratio of below 3.25 times.

As at end-June 2010 the firm's net debt was £1.37bn and average debt/EBITDA stood at 4.54 times.

It added that the deal is expected to complete in late March.