Premier Foods to sell jams and pickles business

UK-based Premier Foods is planning to sell its £200m Hartley’s jams and Haywards pickles units as part of its strategy to lower debts and avoid a breach of its credit agreement.

The company has consulted two investment banks to sell the businesses as separate units, each with a dedicated production facility, and the banks are contacting potential buyers, which are likely to be private equity firms or food companies.

Hartley’s, which was founded in 1871 as a jam manufacturer, has expanded into jellies and desserts, replacing the company’s Rowntrees and Chivers brands.

The business, which is headquartered in Histon, UK, has estimated annual revenues of £200m and is valued at between £200m and£250m.

Haywards pickles range includes onions, silverskin onions, beetroot, red cabbage, piccalilli and gherkins, and is based at Middleton with annual revenues of £30m and a value of around £35m.

In early October, the company announced that it will focus on investing in its eight ‘power brands’: Hovis, Mr Kipling, Ambrosia, Sharwoods, Oxo, Loyd Grossman, Bisto and Batchelors, and divest selected businesses.

Premier Foods is struggling to pay off its debt and is holding negotiations with its creditors, which in November gave a grace period on covenant tests until 31 March.

In December, the company agreed to sell its lossmaking Brookes Avana business to 2 Sisters Food for £30m, as well as four of its Irish food brands to the Boyne Valley for a cash consideration of €41.4m.

Premier’s debt fell to £972m at its half-year, which ended June 2011, following the disposal of its canning operations to Princes for £182m in July.

According to analysts, if the proposed disposals are completed, Premier’s debt is expected to fall to £700m.

Caption: Premier Foods is struggling to pay off its debt and is divesting various food businesses in order to address this. (Image courtesy of Premier Foods.)