Premier Shares Advance as Lenders Agree to Defer Covenant Test
Premier Foods Plc (PFD), owner of the Hovis bread and Bisto gravy brands, rose the most in three months after saying its lenders agreed to postpone a financial covenant test until March.
Shares rose as much as 21 percent, the most since Aug. 8, before trading 16.5 percent higher at 3.9 pence as of 9 a.m. in London, giving the St. Albans, England-based company a market value of 94 million pounds ($150 million). Premier had lost two- thirds of its value in the last month, as of Nov. 4, the last share close.
Lenders deferred a test due on Dec. 31 to March 31, 2012, as part of Premier’s discussions on debt refinancing, the company said in a Regulatory News Service statement today. Premier was in talks with banks to reset covenants beyond their current maturity of December 2013, Chief Executive Officer Michael Clarke said last month.
“In recent weeks, we have set out our priorities and made significant leadership changes to strengthen our focus,” Clarke said in the statement today. The company will provide an update on long-term debt refinancing and extension after completing talks with its lenders, he said. Clarke said in October he was “pretty optimistic” about discussions with the banks.
Premier’s shares plunged 42 percent to a record low last month after the company said it will miss analysts’ full-year estimates as third-quarter earnings were “significantly below management forecasts.” The company will focus on eight “power brands” that contribute to two-thirds of sales, including Hovis, Batchelor’s, Bisto and Mr. Kipling, and dispose of businesses that add little value, Clarke said then.
To contact the reporter on this story: Namitha Jagadeesh at firstname.lastname@example.org
To contact the editor responsible for this story: Colin Keatinge at email@example.com