LONDON British group Premier Foods (PFD.L) said Chief Executive Michael Clarke had resigned, after 18 months trying to streamline the debt-laden maker of Hovis bread, a surprise departure that hit its shares on concern over its turnaround plan.
Clarke sold brands including Sarson's vinegar and Branston pickle to bring down 1.3 billion pounds ($2 billion) of borrowing built up before the financial crisis, and initiated a shake-up at the company's bread division.
He is replaced by Gavin Darby, most recently CEO of Cable and Wireless Worldwide, but has agreed to be available until the middle of the year to ensure a smooth handover.
Analysts said they were concerned Clarke's departure could derail progress at Premier Foods, which has been trying to focus on core brands like Mr. Kipling cakes and Sharwood's curry products to boost revenue and make its debts more manageable.
As well as selling off chunks of the business, the group secured a debt refinancing last year and in November cut 900 jobs at its bread unit, which accounts for nearly 40 percent of revenue. The division had lost a 75 million pounds contract, reported to be with the Co-Op.
"We see the surprise change of leadership as unhelpful to Premier's stability and organic growth prospects," said Martin Deboo at Investec. "With its financial restructuring complete, we think that consistency and longevity of leadership was going to be critical to its prosperity."
Shares in the firm, which have risen 20 percent in the last 12 months as concerns over the company's debts receded, were down 13 percent at 105 pence at 8.27 a.m .
Premier Chairman David Beever told reporters the management switch would not herald a change in the group's strategy and added that despite Monday's share price fall, the firm had received support concerning Darby's arrival.
"Present indication is that all change is always frightening to investors," Beever said, "(but) the meeting with analysts this morning was extremely satisfactory and we've had some supportive comments from some of our big investors including Warburg Pincus (its top shareholder)."
Outgoing boss Clarke had indicated over Christmas that he was considering leaving, Beever said. He said reports that Clarke's exit was due to a pay dispute were "nonsense".
Premier said Clarke, who steps down with immediate effect, wanted to pursue other business opportunities, although it did not believe he yet had a job to go to.
Darby, who engineered the sale of Cable & Wireless Worldwide to Vodafone (VOD.L) last year, will take over on February 4.
He spent a decade in the telecoms industry after working at Coca-Cola Company for 15 years in various roles in Britain.
Darby, who said his favourite Premier brand was Sharwood's, has agreed to invest a "significant sum" of his own money in Premier shares, which he said would be matched by Beever if he was still at the company in three years time.
(Editing by Tom Pfeiffer and Mike Nesbit)