Hovis owner Premier Foods sells canning business for £182m

by Jonathon Sibun - 15/02/2011

"Premier Foods chief executive Robert Schofield has claimed the company is "nearly at the finishing line" in its efforts to pay down debt after agreeing a £182m deal to sell its canning business. "

The sale to Princes, the UK food and drinks group owned by Japan's Mitsubishi, comes just weeks after Premier sealed the £205m disposal of its Quorn meat-free business.

Premier has been restructuring to reduce a £1.37bn debt pile as of June last year, but Mr Schofield said the canning sale would mark the last necessary disposal. Of other potential sales, he said: "It would have to be an eye-watering offer because we don't want to do it."

The canning arm, based in East Anglia, owns the Crosse & Blackwell and Fray Bentos brands but 57pc of sales come from own-label products.

"These deals bring debt down to £1bn and with cash generated in the second half to less than £1bn," said Jim Smart, finance director. "I can support a mortgage of less than £1bn quite easily."

While Mr Smart admitted that the canning sale would be "marginally" dilutive at 5.75 times earnings, he said a debt refinancing and cost cuts would keep any impact to a minimum.

More Details: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8311747/Hovis-owner-Premier-Foods-sells-canning-business-for-182m.html