Premier Foods given more time to get finances in order

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

The move was 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.

Premier has been fighting for its survival in recent months as profits plummet and it struggles to keep up with repayments on its £850m debt mountain.

It has suffered as shoppers 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 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, which employs 320 staff in Stokesley, North Yorkshire.

Analyst Clive Black, at Shore Capital, said: “We are relieved for present investors that room is available for Michael Clarke, the new chief executive, to see through his fresh perspectives for the company.”