Premier Foods in talks to raise capital

Britain's biggest food maker Premier Foods today confirmed it has held talks with a number of investors as part of plans to ease…

Britain's biggest food maker Premier Foods today confirmed it has held talks with a number of investors as part of plans to ease its £1.7 billion debt burden.

The group, which makes Hovis bread, Mr Kipling cakes and Branston pickle, is thought to be looking to raise between £250 million and £300 million.

It said talks about the potential investment were at an early stage.

The move is part of a previously announced review of the company's financial structure as it seeks to find ways to speed up efforts to reduce its borrowings.

Premier gave no further details of the plans today, but stressed it will give "full consideration" to the rights of shareholders in any decision. It will update on trading next month.

The company's lending banks have agreed to postpone a test of its banking covenants from the end of this month, to the end of March. The deferral, in return for a fee of £4.9 million, will allow talks with lenders to continue into the first quarter of next year.

Premier's brands in the Republic include Campbells, Oxo and McDonnells. Last year Premier agreed to sell Erin, its largest retail brand in the Republic, to facilitate the purchase of fellow food group RHM.