Premier Foods has announced that it is proposing a capital reduction, in order to reduce its profit and loss deficit and create additional distributable reserves for the business.
The Bisto maker said that it was proposing the move following the completion of its strategic turnaround programme over the past year, which has seen it accelerate the reduction in its net debt levels, as well as the appointment of a new management team.
In a statement, the company said that its net debt has been reduced to £382.8 million on a pre-IFRS 16 basis (£403.1 million, post-IFRS 16), and net debt/EBITDA reduced to 2.3x on a pre-IFRS 16 basis.
The turnaround programme has 'significantly improved' its financial position, giving it a profit and loss account deficit of £460.3 million as of 24 October.
'The company is therefore proposing a capital reduction in order to cancel the amount standing to the credit of the share premium account and to transfer it to the company's profit and loss account,' Premier Foods said in a statement.
'The realised profits thereby created would be applied to increase the accumulated profit on the company's profit and loss account. This is intended to eliminate the profit and loss deficit and, in addition, to create additional distributable reserves for the company. The proposed capital reduction itself will not involve any distribution or repayment of capital or share premium by the company and will not reduce the underlying net assets of the company.'
Premier Foods will hold a general meeting on 11 January, at which the motion will seek shareholder approval.
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