Tue, 26 Oct 2010 | BUSINESS SALE
Less than one month since Quorn was put up for sale, Premier Foods is rumoured to be considering putting another of its businesses - Hovis - on the block.
The potential sale would help to address its £1.35 billion debt problem. However, a mergers and acquisitions expert commented that the sale would not be enough and that further action would be required in order to raise funds.
Increasing competition in the bread market would make it more difficult to get the best value for the business, though a successful sale of Hovis would still serve to reduce the debt substantially.
It has also emerged this month that Premier Foods is to repay £167 million over the next four years, after several financial arrangements agreed with its lenders in 2007 and 2008 went sour in the onset of the recession.
Chief executive officer Jim Smart said, “People just didn’t envisage that interest rates would collapse in the way they did.”
A figure of £11 million is due this year, then £12 million in 2011. The repayments then increase sharply with £47 million due in 2012 and a further £97 million in 2013.
Premier Foods’ spate of bad news this month continued with Tesco’s removal of 12 Hovis products from its shelves, as hiked wheat prices left Premier with no choice but to increase its bread prices.
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