Premier offloads Brookes Avana
Clock is ticking as first divestment barely diminishes Premier’s debt …
Beleaguered UK food manufacturer Premier foods has managed to sell its lossmaking chilled foods business Brookes Avana to 2 Sisters Food Group (owned by Boparan), for GBP 30 million. The maker of Hovis Bread and Mr Kipling cakes said the divestment was an important first step towards streamlining its portfolio. Brooks Avana posted a loss of GBP 13.3 million.
Comment: Well, that’s 30 million down, one billion to go. Premier managed to negotiate a stay of execution with its lenders, who agreed to postpone covenant tests until 31 March 2012. The divestment of Brookes Avana is indeed a start, but the proceeds from this sale are really just a drop in the ocean when it comes to writing down Premier’s GBP 1.27 billion of debt. The clock is ticking. 2 Sisters, meanwhile, paid cash for Brookes Avana.
Is it facetious — or naïve — of me to suggest that this is a lesson in not over-leveraging to grow the size of your business? Premier is up in the top three UK big-hitters, along with Northern (now also owned by Boparan) and Unilever. It got that way by buying up loads of stuff using other people’s money. How useful, or successful, was all of that, in the end?
Picture credit: Premier foods