Half a loaf

With a pre-tax loss of £259 million in 2011, the Premier Group, Britain’s largest food manufacturer had immense problems in servicing its £1.4 billion debt.

The banking syndicate led by the Royal Bank of Scotland and Lloyds Banking Group agreed to an extension of 2.5 years and relaxed covenants on Premier Foods' loans.

Premier managed to defer interest rate payments as well as contributions to the company’s pension deficit. In turn, the food manufacturer paid its lenders £25 million up-front and pledged to sell £330 million in assets.

Losses narrowed to £23.5m in the six months to the end of June 2012 versus a loss of £45.8m for the same period last year.

Chief executive Gavin Darby commented: "We have already completed the actions to deliver the promised £20m of overhead cost savings for 2013 and continue to keep a tight control over costs.

"The restructuring of our bread and milling business is ahead of plan and we are taking the decisions necessary to create a more sustainable platform for this business."

Now the owner of the iconic Hovis brand has said it is looking for a partner to help with its struggling bread business.

The company has spent £28m on restructuring its bread business this year after closing two mills and three bakeries, and losing several contracts.

Having embarked on a rigorous policy of cost saving and disposals the company is anxious to lose the tag of a “zombie business”.