Premier Foods to meet unions over Hovis developments

06 March, 2014

The senior management of Premier Foods is to meet with union bosses to discuss Hovis workers affected by the partial sale of the bread brand. 

The Gores Group paid £30m for a 51% stake in the bread business, which will be run as a joint venture called Hovis Limited. Premier said it planned to invest the sale proceeds into its grocery business, which has been struggling under the weight of huge debts.

A spokesman for Unite said the meeting, which will be held at its headquarters, would involve all unions covering the Hovis workforce, “We look forward to a constructive dialogue,” the spokesman said.

A Hovis source told British Baker a consultation with management and admin staff was now complete and the next stage was to discuss workers from all the bakery sites.

“There are no plans for significant job losses as a direct result of this transaction,” the source said.

A union source added he was also hopeful there would not be job losses.

When the deal was announced in January, Premier Foods said in a statement: “All baking, milling and associated head office employees are consequently expected to transfer to the new venture following an appropriate consultation process.”

On Tuesday, Premier Foods announced a £1.13bn refinancing plan, aimed at reducing its heavy debts and reviving the business. Chief executive Gavin Darby, who took the helm 12 months ago, described the new capital structure as “transformational” for the business, which at one point laboured under £1bn in debt.

The group said it would raise a total of £353m via new shares and a rights issue. It also proposed to raise £475m through a bond issue and said it had secured a new £300m banking facility.

“This new capital structure will liberate Premier Foods from its past and provides a great platform on which to execute our category-based strategy,” said Darby.

Financial results also published this week show a 12.3% fall in 2013 trading profit to £139.5m. Sales declined 20.1% to £856.2m. Its adjusted net debt at 31 December was £513.1m, a reduction of £120m over the year.

Last year, Premier Foods closed two Hovis sites with the loss of 900 jobs following the loss of a £75m contact with The Co-operative.





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