7th Mar 2014 09:27
LONDON (Alliance News) - UK food producer Premier Foods PLC Friday priced a two-tranche GBP500 million offering of senior secured notes, part of the capital restructuring it announced earlier in the week.
The owner of brands including Ambrosia custard, Bisto gravy granules, Sharwood's sauces and Mr Kipling cakes, is going through a transformation after being saddled in recent years by a massive debt pile, rising interest costs and as some of its diverse range of food businesses underperformed.
Earlier this week Premier Foods said it will raise over GBP1.1 billion in new funds and credit facilities at lower interest rates and improved terms to try and turn around its financial position. That capital restructuring included raising GBP353 million in a placing and rights issue, funds it will use to reduce its debt. It has also agreed a far less-onerous schedule of payments to reduce the deficit on the company's pension scheme and raised a new credit facility and securitisation facility with a smaller group of banks at better terms and interest rates than its previous facility. Finally, it said it will raise GBP475 million through issuing senior secured notes.
Friday, the company said it is offering two tranches of senior secured notes worth GBP500 million in total. The first tranche, with GBP325 million, are 6.50% senior secured notes due 2021, while the GBP175 million second tranche is made up of senior secured floating rate notes due 2020 at 3-month sterling LIBOR plus 5.00%, reset quarterly.
"As a result of the proceeds of the issuance of the notes having been increased by GBP25 million as compared to the originally envisaged issuance size... it is expected that the available amount under the revolving credit facility referred to in the prospectus will be reduced to approximately GBP272 million," the company said.
"This new capital structure will liberate Premier Foods from its past and provides a great platform on which to execute our category based strategy," said Chief Executive Officer Gavin Darby in a statement earlier this week.
The group had already reduced its net debt by GBP120 million during 2013, using some of the money it got from disposals.
Shares in Premier Foods were trading 1.1% lower Friday morning, at 156.25 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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