Premier Foods secures £1.1bn refinancing deal
PREMIER FOODS announced it has sealed a £1.1bn refinancing package yesterday, in a major feat for the food company that it says will help “liberate” it from its past and ease its debt-pile.
The company behind Mr Kipling cakes and Ambrosia custard confirmed plans to raise £353m via a placing and a rights issue, and a further £475m through a bond issue.
It has also secured a new £300m banking facility, reducing its syndicate of bankers from 28 to seven and struck a new pensions agreement that will help reduce cash payments by £156m over the next three years.
“What we’ve been working on is a strategy to take away in one fell swoop the three big issues that have over-burdened our company; uncertainty over bread, the scale of our debt and the scale of our commitment to the pension scheme,” chief executive Gavin Darby said. “This new capital structure will liberate Premier Foods from its past and provides a great platform on which to execute our category based strategy,” he added.
The capital raising includes a £100m placing of 77m shares at 130p each, and an eight for five rights issue of 507m shares at 50p, raising £253m.
Premier Food’s debts will fall from £831m at the end of December to £513m following the refinancing.
The deal was announced alongside its full-year results, revealing a 12.3 per cent fall in trading profit to £139.5m. Shares rose 1.96 per cent.
THE THREE WAYS PREMIER FOODS WILL RAISE £1.13BN
£475m
The bulk of the money will be raised via a £475m bond issue
£353m
Premier Foods will also launch a a placing of new shares and a rights issue to raise £353m
£300m
The remainder of the money will be secured via a new £300m banking facility
BEHIND THE DEAL
ONDRA PARTNERS | JASON MEERS
1 A graduate in mechanical engineering, Jason Meers began his career in the oil and gas sector working for engineering firm Bechtel. In 1999 he changed careers and took an MBA at Rotterdam School of Management before entering the banking world.
2 Meers joined Ondra Partners in 2012 after 10 years with Barclays, where he specialised in leveraged finance and first struck up a relationship with Premier Foods.
3 Meers described the Premier Foods restructuring as a “classic Ondra problem: a highly complex multi-faceted problem where there was no obvious solution”.
Also advising…
Premier Foods’ corporate brokers Credit Suisse and Jefferies acted on the £1.1bn capital refinancing plan together with banks HSBC, BNP Paribas, Barclays, Investec, Shore Capital and Ondra Partners. Financial PRs Liz Morley and Tom Eckersley at Maitland are also advising Premier Foods.