PREMIER Foods, the owner of brands including Batchelors soup and Hovis bread, has admitted that it will be forced to sell more assets as part of an enormous debt restructuring plan.
Britain’s biggest food manufacturer says it will focus on its core businesses as it struggles to deal with a £1bn debt pile which built up during a string of acquisitions before the credit crunch.
Yesterday it announced that it had reached an arrangement to extend the existing £1.2bn banking facility, due for repayment next year, until June 2016.
However this comes at a price, with the banks’ margin set to increase by one per cent to 3.25 per cent from January 2014.
Having already earned £400m from the sale of businesses during 2011, the firm’s new arrangement will force it to raise a further £300m from disposals by 30 June 2014.
Year-end pre-tax profits plummeted to a £259.1m loss for 2011, driven by a £282m writedown relating to the value of Premier’s Hovis bread business which it bought at the peak of the market. Trading profits declined 29 per cent to £173.7m.
“Having put the financing and strategic building blocks in place, our immediate priorities are to implement this re-financing package, continue stabilising the business, re-focus the portfolio and invest in our future growth,” said chief executive Michael Clarke, who has been brought in from Kraft to turn around the business.
Shares closed down 4.2 per cent at 11.5p, against a high of 288p in 2007.