A refinancing deal announced by Premier Foods earlier this month is “a step in the right direction”. However, investors will remain ambivalent until further progress has been made, according to industry commentators.
The rumour mill has been in overdrive recently, speculating that the owner of brands such as Ambrosia and Mr Kipling is set to announce a major refinancing package, but Premier Foods released a statement last week that advised no concrete decisions have been made.
However, Nicola Mallard, Investec analyst, believes refinancing is part of the company’s wider plans. She told FoodManufacture.co.uk: “We think it is the forerunner to a wider ranging refinance, possibly including an equity fund raise.”
The reorganisation of its ‘Receivables Securitisation Agreement’ includes increasing the size of the programme from £100 million to £120 million, cutting the interest margin and extending the scheme’s terms,
These new terms will run until the end of September 2015 and include an option to extend further until the end of 2016.
According to FoodManufacture.co.uk, one industry source said: “It’s a step in the right direction, but management will recognise there is a lot more to do to reduce pressure on the business and ease the concerns of shareholders.”
In the meantime, there has been no news on the progress of talks surrounding the sale of Premier Foods’ bread business.
Private equity firm PAI Partners have put in a strong bid for this particular part of the company and appear to be the front-runner at the moment.
In their statement, Premier Foods acknowledged press comments surrounding a potential capital restructuring.
The company advised: “As previously stated in the group's half-year results in July 2013, the board continues to review the full range of options available to the group regarding its future capital structure."
Premier Foods issued a statement today (December 23) noting press comments about a potential capital restructuring. The firm said its bank debt and revolving credit facilities were in place until mid-2016. “As previously stated in the group's half-year results in July. The group confirms that this review is ongoing and, while it includes the possibility of a rights issue, no decisions have been made at this stage.”