Premier Foods slashed its dividend and said today it had renegotiated its finances in a move that boosted its shares.
Britain's biggest food producer has seen its shares slump by 50 per cent over the last eight weeks on worries it might breach borrowing terms and as spiralling ingredient costs and competition from rivals and supermarkets hit margins.
Analysts had expected Premier Foods would pay a 13 pence a share total dividend but the maker of Branston pickle, Oxo stock cubes and Angel Delight cut it to 6.5p to save money.
It also rejigged borrowing arrangements with banks to give it breathing space, taking out an additional £125 million sterling loan and swapping a £100 million acquisition facility to a working capital facility.
Shares in the firm jumped 14 per cent to 105 pence in early trading.
The company has borrowed £1.6 billion, and the new moves mean it can now borrow up to £2.1 billion.
Analysts have also speculated that the firm may sell off some of it units to help scale back its growing debt burden, but Chief Executive Robert Schofield said the firm had no current plans for a break-up.