Premier Foods gets extra time to get finances in order

The troubled company behind Mr Kipling and Branston pickle today said it had been given extra breathing space by its banks to get its finances in order.

Irish Premier Food brands include Erin soups, Gateaux cakes and Chivers preserves.

Debt-laden Premier Foods said tests on financial covenants, which were due on December 31, have now been deferred for three months as it buys more time to thrash out a refinancing package.

Shares were up 11% after the company described the latest development as “an important step” towards a longer term financial foundation for the business.

The move was also seen as a vote of confidence in new boss Michael Clarke and his plans to focus the company’s efforts on eight “power brands” of Hovis, Ambrosia, Batchelors, Bisto, Loyd Grossman, Mr Kipling, Oxo and Sharwood’s.

St Albans-based Premier has been scrapping for its life in recent months as profits plummet and it struggles to keep up with repayments on its £850m debt mountain.

Its share price has collapsed from 34p to 4p over the past year after a series of profit warnings.

It has suffered as shoppers increasingly switch to supermarket own-label brands and it is forced to put on more promotions to compete.

Under the leadership of Mr Clarke, the UK’s largest manufacturer is considering the possible sale of some of its well-known brands as it looks to shore up its balance sheet.

Brands such as Smash, Sun-Pat and Branston, which are not in the eight power brands, could be placed on the market.

Premier built up its debts in a buying spree last year that saw it snap up the likes of Hovis owner RHM. It recently moved to alleviate some pressure by selling off its canning business and meat-free division Quorn.

Premier recently revealed that sales volumes across all divisions dropped 8% in the three months to September 30.