Premier Foods plc PFD Disposal

  Premier Foods plc (PFD) - Disposal

RNS Number : 8202P
Premier Foods plc
30 October 2012

30 October 2012

                      Premier Foods plc ("the Company")



· Bank Agreed Disposal Target Significantly Exceeded Leading to 30%
Reduction in Net Debt since 30 June 2012

Premier Foods today announces it has  entered into a conditional agreement  to 
sell its sweet pickles and table  sauces business (the "Disposal") to  Mizkan, 
for a cash  consideration of  £92.5 million,  subject to  approval by  Premier 
Foods' shareholders and consent from its banking syndicate. Once the Disposal
is completed, the Company will have delivered around £370 million in  disposal 
proceeds since March 2012, significantly exceeding the £330 million target  it 
committed to achieve by June 2014  as part of its new financing  arrangements. 
This will represent a reduction of approximately 30% in the Company's net debt
since the position reported at the Half Year^1.

The Disposal includes Branston sweet pickle, ketchup, relish, salad cream  and 
mayonnaise, together with the  Company's Bury St  Edmunds factory in  Suffolk. 
Completion of the Disposal  is expected to  take place early  in 2013 and  all 
employees at  the  site  are  expected to  transfer  to  Mizkan  following  an 
appropriate consultation process.

Following completion of the Disposal, the  branded sales mix of the  Company's 
Grocery business will increase to approximately 90%.

Michael Clarke, Chief Executive Officer of Premier Foods, said:

"I'm delighted to have exceeded our  disposal target 20 months early while  at 
the same time delivering three successive quarters of sales growth and  taking 
£40 million of overhead costs out of the business this year. We can now  focus 
our attention  on  driving  further  momentum  in  our  Grocery  business  and 
unlocking value in Bread"

"Our disposals since March have achieved a healthy average EV/EBITDA  multiple 
of 8.9x based on current year  trading and expected overhead cost  reductions. 
This is a good result in the current market."

Kazuhide Matazaemon Nakano VIII, Chief Executive Officer, Mizkan, commented:

"Branston Sweet Pickle is an iconic brand that has established a market
leading position. The Branston brand is also an excellent strategic fit with
our global portfolio and adds to our solid foundation for growth in the UK."

Transaction highlights

· The transaction includes  the production, distribution, sales,  marketing 
and licensing of the Branston brand, a significant private label business  and 
the Bury St. Edmunds site.

· Consideration of £92.5  million is payable in  cash on completion of  the 
Disposal  and  is  subject  to  an  adjustment  for  the  value  of  inventory 
transferred at completion.

· The proceeds of the Disposal will be used to pay down debt.

· Premier  Foods  and  Mizkan  have entered  into  a  co-packing  agreement 
pursuant to which Mizkan will  continue to manufacture certain cooking  sauces 
and other products at the Bury St Edmunds site for the next 15 years.

·  Premier  Foods  and  Mizkan  have  entered  into  transitional  services 
arrangements to facilitate the smooth transfer of the business.

· The Disposal is conditional on the approval of the Company's shareholders
and consent from its banking syndicate,  and is expected to complete early  in 

For the financial year  ended 31 December 2011,  sales^2 of the sweet  pickles 
and table sauces business were £66.0 million, of which 54% were branded sales.
EBITDA^3 for the  year ended 31  December 2011 was  £11.7 million and  Trading 
Profit^4 was £8.5 million.  The gross assets of  the business being sold  were 
£81.8 million as at  30 June 2012. As  previously announced, to help  mitigate 
the impact on the Company of this and other transactions announced this  year, 
the Company expects to deliver further overhead cost reductions of £20 million
in 2013, over and above  the £40 million of savings  that will be achieved  by 
the end of 2012.

A circular will be sent  to shareholders in due  course giving details of  the 
Disposal and containing a notice of a general meeting at which a resolution to
approve the Disposal will be proposed.


For further information, please contact:

Premier Foods plc 
 01727 815 850

Richard Johnson, Corporate Affairs Director

Richard Godden, Head of Investor Relations

 020 7379 5151

Tom Buchanan

Brian Hudspith

Notes to editors:

1. Reported Net debt of the Company at 30 June 2012 was £1,269.4m.

2. Sales exclude Beetroot and Piccalilli which are manufactured at the  Bury 
St Edmunds site under a co-packing agreement.

3. EBITDA is  profit before  interest, tax,  depreciation, amortisation  and 
selling, general and administrative costs.

4. Trading profit is before selling, general and administrative costs.

5. Mizkan is a 207 year old privately held international manufacturer, based
in Japan. Mizkan  has a stable  of well-known international  brands under  the 
"mizkan" umbrella brand  and is  a leader  in the  liquid condiment  category. 
Mizkan is  one  of  the  leading  vinegar  manufacturers  in  the  world  with 
operations in Japan, the United States, the UK and other Asian countries.

6. In July  2012, Mizkan acquired  Premier Foods' vinegar  and sour  pickles 
business for a cash  consideration of £41  million. That transaction  included 
the Sarson's, Haywards and Dufrais brands.

                     This information is provided by RNS
           The company news service from the London Stock Exchange


DISQBLBXLBFEFBB -0- Oct/30/2012 07:00 GMT
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