Premier Foods saved by loan deal

 

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The Independent Online

The future of household favourites such as Hovis, Ambrosia and Mr Kipling was secured today as Premier Foods landed a crucial deal to renew more than £1 billion of loans.

The UK's largest food manufacturer has hammered out a deal with its banks - including part-nationalised lenders Lloyds and Royal Bank of Scotland - which will see its repayment deadline extended from December 2013 to June 2016.

The re-financing package, to be formalised by the end of the month, will allow the St Albans-based company to execute its strategy, which involves focusing investment on eight "power" brands, including Oxo and Bisto.

The group was brought to the brink by debts amassed on an expansion spree that saw it buy Hovis bread firm RHM for £1.2 billion in 2007 and Campbell's UK and Irish business, adding Batchelors, Homepride and Fray Bentos to its catalogue in 2006.

Premier Foods reiterated its expectations for 2011 results to be at the lower end of market expectations as it looks to stabilise the business.

The group is expected to sell off a number of brands as part of its new deal, with Sarson's vinegar and Hartley's jam reportedly on the list for potential sale.

Premier's shares were 258p five years ago and sunk as low as 3p in November before recovering to 11.67p today, valuing it at nearly £280 million.

The group recently embarked on a major television advertising drive as part of more than £50 million of marketing due this year to promote its main brands, which also include Batchelors and Sharwood's.

PA

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