Premier Foods has remained silent after rumours that it has, or is about to, break loan covenants causing its share price to plummet in morning trade today (17 October).
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A combination of higher production costs and the downturn in consumer spending have caused concerns that Premier will not be able to service its debts.
Shares in the UK food group had dipped 37.14% at 1.13pm (BST), falling to GBP0.23 from an open of GBP0.4575.
When contacted by just-food, Premier declined to comment on “market rumour or speculation”.
However, earlier this week the UK food group confirmed that it is looking into ways to accelerate debt reduction.
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By GlobalDataThe company told just-food that it is in talks that could result in a cash injection from the private equity industry, allowing the UK food group to alleviate its huge debt burden.
The maker of Hovis and Quorn had debts of GBP1.8bn (US$3.1bn) at the end on June due to acquisitions in 2007, including its purchase of rival UK food group RHM and the UK operations of Campbell Soup Co.
As economic conditions worsen, Premier said that it is looking to speed its debt reduction initiatives.
“In recent months, the group has been approached by several parties with proposals in line with this stated priority,” it said. “The group is examining these proposals amongst other options and a further statement will be made as and when appropriate.”
It is understood that the company does not face a loan covenant test until 31 December.
