Premier Foods reviewing debt burden - reports

Lenders to Hovis owner Premier Foods have hired advisers to help push through a speedy reduction in the company’s debt burden, it was reported today.

Accountancy firm Deloitte has been appointed by Lloyds TSB and Royal Bank of Scotland, the company’s principal bankers, to act on behalf of the company’s 35-strong lending syndicate, the Sunday Telegraph said.

Meanwhile, William Hill has begun talks with its banks about refinancing £1.2bn (€1.5bn) of debt.

The company hopes to complete the discussions by the time of full-year results in February, the Sunday Times said.

Among the options said to be under consideration at Premier is a relaxation or renegotiation of its key borrowing covenants, which could provide it with additional breathing space as it looks to reduce its £1.7bn (€2bn) debt.

Premier, which counts Branston, Mr Kipling and Angel Delight among its other brands, is said to have tabled a series of proposals to its lenders in recent days. None are thought to focus on the disposal of any of its leading brands.

Its share price has fallen sharply amid concerns about the level of debt on its balance sheet after recent mergers with RHM and the UK arm of Oxo and Homepride company Campbell’s Soup.

The group said in July that it met its financial covenant tests at the end of June and that it expects to continue to operate within them.

It is due to issue an update on trading later this month, when it is likely to say it has continued to perform strongly. A reduction in its debt burden would allow the City to re-rate its shares at a time when defensive stocks such as food companies are likely to find more favour among nervous investors.

Last month, it was reported to be in detailed talks with CCMP Capital, formerly the private equity arm of JP Morgan, about a major capital injection worth several hundred million pounds.