Vision Capital and Premier Foods have been tipped as potential buyers for debt-ridden cake company Inter Link, which this week suspended trading of its shares.
Inter Link, which has 12 UK bakeries and one in Poland, has seen a rapid decline over the last year with shares dropping from 770p to a low of 72.5p in March.
Its share price was 106p, valuing the company at £12.5 million when trading was suspended on Tuesday, following the decision by potential Irish buyer McCambridge to withdraw an offer. Under the rules of the Alternative Investment Market, Inter Link can suspend trading for up to six months, or longer if it is granted an extension.
Chairman Jeremy Hamer said Inter Link was making progress towards a "long-term solution" to its £63m bank debt. He said that a number of bidders had made offers for Inter Link, but below the £63m level. He was also expecting McCambridge to come back with a revised bid.
Hamer explained that McCambridge had made an offer for the company based on the condition that its banker, Barclays, wrote off some of its debt. However, it was not acceptable to the bank that shareholders profit from the deal while it lost out. McCambridge then withdrew its offer.
Hamer commented: "This is a huge disappointment in terms of relations with our shareholders. It is a bad day for them; we are saying there is no value in the company for them. But we are optimistic that this is the way to a long-term solution, which reduces our borrowing."
Business was continuing to improve, he said, with customers, suppliers and staff remaining supportive. "We need a solution to the debt problem - an offer that is enough for the bank to say yes to."
Inter Link said in a statement that the bank continued to support its trading requirements while sale opportunities were explored. It said it met its sales budget in May.
Analyst Andy Blain of Shore Capital commented: "A few organisations will have run a slide rule over Inter Link during the last few months. Possible buyers might include Premier Foods, which owns Mr Kipling, although it is still busy intergrating RHM. Vision Capital, which bought Park Cakes from Northern Foods, might also be interested in another specialist cakes company, as might McCambridge as well as private companies."
There was a lot of retailer support behind Inter Link, he added: "When you think how many mince pies it makes - 100 million a year - if it went under, we would have no mince pies at Christmas."