Premier Foods moves to reassure investors after share decline
(Reuters) - Premier Foods Plc's (PFD.L) shares rose 6 percent after the company said it maintained its full-year expectations as it sought to reassure investors concerned with the steep fall in the debt-laden company's stock price.
The maker of Bisto gravy and Hovis bread, whose shares have more than halved since late March, is grappling with debt of close to 1 billion pounds ($1.6 billion) that it built up during a spending spree before the 2007 credit crunch.
"The business still has a tremendous amount of debt so the equity value as a proportion of the enterprise value is about 20 percent or so, so it makes the equity highly volatile," Paul Kavanagh, partner at Killik & Co, told Reuters.
The owner of the Mr. Kipling and Batchelors brands has been in numerous debt refinance talks and has undertaken a restructuring program that includes cutting costs and jobs.
The company also lost its chairman Ronnie Bell earlier this month, when he quit to pursue other interests.
"The fall is much warranted and the stock will fall further. It is overvalued. No one is aware of any other specific issues with the company," said Exane BNP Paribas analyst Jeff Stent.
Shares in the company were up 4 percent at 1010 EDT on Tuesday on the London Stock Exchange.
(Reporting by Karen Rebelo and Monika Shinghal in Bangalore; Editing by Don Sebastian)
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