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Premier Foods continues to try to restructure its debt of £1.8bn and has succeeded in deferring a key covenant test, slated for the year-end, to 31 March 2009.
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The company remains in talks with its banks over its debt restructuring and has also scrapped the interim dividend. Earlier reports of private equity interest have faded. Chief executive Robert Schofield said that there were around 20 approaches for various parts of the business, but most were priced too low.
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The debt restructuring will not come easy and Premier remains at risk of a covenant breach. With no catalyst in sight, the shares, which are down 82 per cent since we advised selling them (168.5p, 10 January 2008), will struggle to recover. Sell at 29.5p.
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