Premier Foods breathed a sigh of relief yesterday after its lending banks agreed to postpone a crucial covenant test until the end of March. Analysts had predicted the debt-laden group would breach the covenants, originally scheduled for the end of the year, which would have been a huge blow to the new chief executive Michael Clarke in his attempt to stabilise the company. He said yesterday's news was an "important step towards securing a longer term financial foundation".
The group, whose brands include Mr Kipling and Hovis, remains in talks with its banks about refinancing debts that mature at the end of 2013. This follows the move to restructure its management, and plans to sell non-core brands. Premier has struggled in the downturn and in October a profit-warning wiped two-thirds off its value. Its shares jumped 10 per cent to 3.7p yesterday.