Premier Foods, which owns Hovis bread, Branston pickle and Quorn, is in talks with private equity groups over a cash injection in the latest move to shore up its balance sheet.

The group, whose debt reached £1.8bn at the end of June, is likely to make an announcement today confirming the discussions, although it is expected to stress that no deal was imminent. Prospective investors include CCMP, the former private equity arm of JPMorgan.

While it is too early to say how an investment would be structured, a deal, potentially worth several hundred millions of pounds, could take the form of preference shares or a convertible debt instrument.

Premier’s share price has fallen sharply amid concerns about the level of debt after recent mergers with RHM and Campbell’s Soup.

The impact of higher commodity prices on working capital and lower values from some property assets have also affected debt.

However, the company, which renegotiated banking terms early this year, said it had been within covenants at the end of June and it expected to continue to operate within its limits.

Premier’s board believes a reduction in its debt would allow the City to rerate the shares at a time when defensive stocks such as food companies could find more favour among investors.

With debt market frozen, the group has already cut its dividend, saving about £55m-£60m annually, held back on £20m of capital expenditure not related to restructuring and eased back on marketing spending.

Aside from a cash injection from private equity investors, another option being considered by Premier is asset sales.

The shares have fallen more than 75 per cent over the past 12 months. Its market capitalisation now stands at £483.5m, or about a quarter of its net debt.

In August the group reported adjusted interim profits of £60m, up from £57.8m. Turnover rose 44 per cent to £1.29bn thanks to the acquisition of RHM and Campbell’s Soup. However, after exceptionals pre-tax profits were £3.6m (£5.1m).

Premier and CCMP both declined to comment.