£300m rights issue looms for Hovis owner Premier

PREMIER Foods chief executive Gavin Darby yesterday unveiled a turnaround plan for the owner of brands such as Hovis bread and Mr Kipling pies, which could include a £300 million rights issue earlier next year.

Premier Foods chief Gavin Darby wants the Hovis owner to become a normal company. Picture: PA

In an interview with a Sunday newspaper, Darby pledged to tackle the debt and pensions mountain faced by the food producer and turn Premier into a “normal company” in 2014.

The group has struggled under a £1.3 billion debt and pensions burden – four times higher than its stock market capitalisation.

Darby remained tight lipped over the exact details of his rescue plan, but analysts at Credit Suisse suggested the turnaround would include a £300m rights issue to help meet a looming £110m bill for fees, interest and pensions payments.

The company has about 9,000 staff in 35 factories in the UK and built up its debt pile during a series of acquisitions.

Apollo, the Wall Street vulture fund that seized control of biscuit maker Burton’s in 2009, is understood to have bought up some £100m of Premier’s loans.

Darby joined Premier ten months ago from Cable & Wireless Worldwide, making him the manufacturer’s third chief executive in three years.

Premier turned a profit of just £4.4m last year. City analysts expect it to negotiate a further pensions payment holiday from its trustees and also issue a bond.

Darby said: “This company has been restructuring for six years. We want to turn it into a normal company again in 2014.”

Premier has already revealed that it is seeking an outside investor to help it spin-off Hovis into a separately-funded joint venture.