Premier Foods expected to announce £350m rights issue
Premier Foods is expected to announce this week a rights issue of just over £350 million - more than its stock market value of £345 million, according to the Financial Times.
The company is also preparing a corporate bond issue of about £400 million to help tackle its net debt, which stood at £890 million at the end of June 2013. Both these deals, if successful, would amount to a radical turnround for a company whose debts brought it to the brink of collapse during the recession.
Premier is also likely to unveil a deal with pension trustees over its £395 million pension deficit. The group, which has pension liabilities of £3.65 billion, is close to securing an agreement to reschedule its payments and make reduced contributions over the next few years.
The move is aimed at securing an investment grade rating by slashing the group’s high leverage. Net debt is estimated by analysts to have fallen to £860 million at the end of last year, which is about 5 times earnings before interest, tax, depreciation and amortisation.