Premier Foods , Britain’s biggest food producer by sales, has changed its chief financial officer, replacing the highly-regarded Jim Smart in the midst of tense negotiations with the lenders behind its £1.27bn of net debt.
Mr Smart is being replaced by Mark Moran, formerly finance director at SSL International, which owns the Durex condom brand and Scholl footcare and sandal business. The move completes a boardroom revamp by Michael Clarke, chief executive, who joined Premier from Kraft in August and has the task of turning around the ailing manufacturer of Hovis bread and Mr Kipling cakes.
Premier reached agreement with its banks earlier this month to defer covenant tests from the end of the year to March 31 and pay £1.3m, or 10 basis points on the debt, for the concession.
Mr Smart, who joined Premier Foods in 2009, will leave the board in early December after the arrival of Mr Moran. He will remain with the company until early next year.
The move “creates some uncertainty” wrote Martin Deboo, analyst at Investec, in a note to clients
“We rate Smart highly and saw him as central to resolving Premier’s immediate financial priorities of a debt refinancing and the disposal of non core assets.”
Mr Clarke said the appointment of Mr Moran completed a revamp of his senior management team.
Earlier this month the role of Tim Kelly, chief operating officer, became redundant and two external appointees were brought in to run the bakery and groceries businesses.
Mr Moran said his new role would be challenging but pointed to “uncanny similarities” between Premier Foods and his previous employer: “good brands that had been under-invested, debt issues …and people thought we [SSL] could not stay independent.” He stayed six and a half years at SSL before it was taken over by Reckitt Benckiser, the household products group, last year.
In October Premier warned that trading in the third quarter had been “significantly” below expectations. An advertising campaign had failed to deliver the expected sales benefits as money-conscious consumers shifted away from branded to non-branded goods.
Mr Moran said Premier still had scale and strong brands, but just needed to be managed in a better way. “It’s all fixable, we just have to form a credible plan,” he said. “There are no silver bullets in this process.”
Talks about future financing are continuing. Premier had hoped to refinance through the bond markets this year, but the weak state of the high-yield market, added to downgrades of Premier, have in effect ruled out that option.
Premier has been in talks with its bankers for months to try to reset terms. The group, which is paying the price for the leveraged purchases of RHM and Campbell’s UK and Irish operations in 2006 and 2007, has sought to pay down debt via disposals, although this in turn has reduced cash flow.
Shares in Premier on Friday rose 0.195p, or 4.3 per cent, to 4.73p, valuing the group’s equity at more than £100m.
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