Premier Foods, the food group behind Rank Hovis, has announced a new refinancing package – which it claims will aid its new growth strategies.
Under the terms of the package, banking facilities of £1.2bn have been extended from December 2013 to June 2016.
The refinancing package is subject to the formalities of final documents being signed, which are expected by the end of March, and comes after weeks of speculation the company was a close to securing a deal with its lenders.
Premier Foods said that its covenants had also been re-set to reflect the “group’s growth priorities of focusing investment behind eight Power Brands [one of which is Hovis], strengthening its capabilities, reducing costs and divesting selected businesses”.
The total interest rate swap portfolio, including previously restructured swaps, will be restructured into an additional term loan of approximately £200m, which will have the effect of reducing the group’s interest expense. Additionally, the Trustees of the Group’s pension schemes have agreed to defer deficit contribution payments until 2014.
Premier’s shares were 258p five years ago and sank as low as 3p in November before recovering to 10.88p as of 9 March.
In a statement, Premier said: “The group reiterates that it expects overall financial results for 2011, both reported and underlying, to be at the lower end of market expectations and that its current focus continues to be to stabilise the business and invest in its recovery and future growth.”
It added that further details of the refinancing package and trading performance would be provided when it announces its 2011 full-year results and details of its growth strategies, expected to be at the end of March.