Premier Foods, the struggling foods group which is racing to reduce its debt so it can meet upcoming banking covenant tests, has offloaded four of its Irish brands.
Premier Foods is to sell the Chivers, Gateaux, McDonnells and Erin brands to The Boyne Valley Group for €41.4m, the group announced on Thursday evening.
After disposal costs, Premier, famous for the Hovis and Mr Kipling brands, will receive around €40m, which will be used to repay bank borrowings.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Premier Foods and The Boyne Valley Group have entered into manufacturing agreements under which Premier Foods will continue to manufacture the Irish Brands for three years.
For the year ended 31 December 2010, the brands being sold reported a turnover of €29.5m and an earnings before interest, tax, depreciation and amortisation (EBITDA) of €10.0m (before selling, general, administrative and fixed logistics costs). At 31 December 2010, the brands had net and gross assets of €39.2 million.
For the 12 months to 31 October 2011, the brands had turnover of €26.2m and EBITDA of €9.4m (before selling, general, administrative and fixed logistics costs).
Prior to re-structuring cost savings previously outlined at the third quarter interim management statement, the effect of the transaction on the group will be initially earnings dilutive.
Martin Deboo, an analyst at Investec, reckons the sale will knock 5% off Premier Foods earnings in 2012.
"Coming hard on the heels of the announcement of the Brookes Avana sale agreement, this underlines our determination to streamline the business to help restore profitable growth quickly," said Michael Clarke, the company's Chief Executive Officer.
--
jh
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
