LONDON (Reuters) – Britain’s Premier Foods (PFD.L) confirmed plans for a 404 million pounds ($571.3 million) capital raising on Thursday as it looked to reduce its 1.8 billion pound debt pile, easing fears over its long-term future.
Shares in Premier Foods, which have lost over 70 percent of their value over the last 12 months as debt concerns weighed on sentiment, were up 21 percent to 34.5 pence at 0835 GMT.
The maker of Campbell’s soup and Hovis bread said the issue will be priced at 26 pence per share, a 9 percent discount to its closing price on Wednesday.
Private equity firm Warburg Pincus has taken an initial 10.3 percent stake in the business and could raise that to as much as 20 percent depending on take-up of the placing by existing shareholders under the terms of the agreement.
Warburg Pincus also has the option to take up a seat on the board of Premier Foods, the food manufacturer’s chief executive, Robert Schofield, told reporters on a conference call.
A source familiar with the transaction told Reuters it is highly likely the buy-out firm will do so.
Net of expenses, Premier Foods said it would raise 379 million pounds from the share placing.
The food manufacturer had previously announced that it would not pay a full-year dividend and said it will resume payments when possible, depending on its success in reducing its debt.
Premier Foods also reported a 13.5 percent increase in full-year underlying pretax profit to 193.8 million pounds and said current trading had been in line with its expectations. ($1=.7071 Pound)
By Matt Scuffham
(Editing by Simon Jessop)