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Apollo Snaps Up $155 Million of Premier Foods Debt

ars of Branston Pickle, produced by Premier Foods Plc, are displayed for sale at a supermarket in London, U.K.
Simon Dawson | Bloomberg | Getty Images
ars of Branston Pickle, produced by Premier Foods Plc, are displayed for sale at a supermarket in London, U.K.

U.S. private-equity fund Apollo Global Management has snapped up £100 million ($155 million) of debt in Premier Foods, Britain's biggest branded goods company.

The move could hasten a restructuring at U.K. business, which has almost £950m of debts on its balance sheet.

It is also part of a wider trend that has seen commercial banks finally start to sell of parts of their loan books in efforts to raise their capital ratios. Last year, rival debt fund, Oaktree Capital Group, swooped on gym chain Fitness First, forcing a restructuring and change of control.

Premier, which owns Hovis bread and Mr Kipling cakes, has been working hard to revive its fortunes as part of an on-going turnaround plan. It has seen its share price slide from 125p at the end of last year to 65.5p at Tuesday's close.

(Read More: Apollo Beats Estimates, but Plans to Shutter 25 Campuses)


Mark Moran, Premier Foods' straight-talking finance director, said he was aware of the debt deal and the reputation of so-called vulture funds in the industry, but noted that the company was not worried.

He had met one fund, he said, and had been assured it was not planning to force the company into a back-door takeover.

"They told me that we can all make good money together," Moran said, not commenting on who the debt investor was.

"They are very shrewd and quite tough," he said. "But they are rational and sensible and as long as we deliver on the turnaround strategy we will be fine."

Moran also hinted that the company could look to the high yield market to refinance the company's £950m debts early.

(Read More: Retailers Go Gaga for Groceries)

Premier is expected to bring net lending down to £870m by the end of this year, but will start paying around 7.5pc in financing fees as its lending requirements ratchet up.

"The bond markets are open and attractive—even to companies like ourselves, so it makes sense to look at our options."

Last year, Premier raised £370m from asset disposals from brands like Quorn and its pickles and sauces portfolio. It has also shaved off £48m of costs, with another £20m expected to be cut this year. Premier is now focussing on its key brand strategy, which focuses on the company's market leading products like Oxo gravy and Mr Kipling.

By CNBC's Helia Ebrahimi

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