Premier Foods, the owner of Hovis and Mr Kipling, has confirmed that it is in talks with City investors and private equity companies with a view to raising cash. The cash will be used to cut its £1.7bn debt.
The confirmation came amid speculation that a private equity company was poised to make a bid for the food company.
Premier says that it is “reviewing a range of to accelerate the reduction of group debt” as part of a move to improve its long-term capital structure. It confirmed the talks in a statement to the stock exchange this morning (December 15).
It adds that it has made no decisions about how to proceed with a deal, although Premier chief executive Robert Schofield is reported to have instructed the company’s advisors Goldman Sachs to contact heavyweight investment firms. Goldman Sachs is also understood to have told private equity companies that Premier is seeking a “cornerstone” investor.
In July, Premier announced that it was on course to deliver its profit expectations for the full year, which is due at the end of this month. It revealed a 7% increase in group sales for the half-year to June 28 attributed to price rises to counteract cost inflation. At the time, it expected net debt to fall over the second half of the year to due to factory closures, and the ongoing assimilation of the Campbell’s and RHM businesses.