Equity Issue Details

NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, NEW ZEALAND, JAPAN OR ANY OTHER JURISDICTION IN WHICH THE PUBLICATION, DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. OTHER RESTRICTIONS ARE APPLICABLE. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THE PRESS RELEASE.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS SHOULD NOT SUBSCRIBE FOR OR PURCAHSE ANY SECURITIES REFERRED TO IN THIS ANNOUNCEMENT EXCEPT ON THE BASIS OF THE INFORMATION IN THE PROSPECTUS TO BE PUBLISHED BY PREMIER FOODS PLC IN CONNECTION WITH THE PLACING AND THE RIGHTS ISSUE. COPIES OF THE PROSPECTUS WILL, FOLLOWING PUBLICIATION, BE AVAILABLE FROM THE REGISTERED OFFICE OF PREMIER FOODS PLC.

 

4 March 2014

Premier Foods plc

ADDITIONAL INFORMATION REGARDING £1,128 MILLION CAPITAL REFINANCING PLAN

Premier Foods plc ("Premier Foods" or the "Group") has today announced a £1,128 million capital refinancing plan (the "Capital Refinancing Plan"), comprising the following three components:

·      the raising of approximately £353 million gross proceeds by way of a fully underwritten placing of 76,923,077 shares at 130p each raising approximately £100 million, and a fully underwritten 8 for 5 rights issue of 506,824,531 shares at 50p each raising approximately £253 million (the "Placing and Rights Issue");

·      the raising of approximately £475 million gross proceeds by way of an issue of new bonds maturing in 2020/21 (the "New Bonds"); and

·      a £300 million new revolving credit facility, maturing in 2019 (the "New Revolving Facility").

Premier Foods has today also separately announced its results for the year ended 31 December 2013, which includes a statement from the Chief Executive Officer of Premier Foods and a summary of the Capital Refinancing Plan.

The Capital Refinancing Plan will:

·      accelerate the deleveraging of the Group's balance sheet;

·      extend the maturity profile of the Group's financing arrangements; and

·      strengthen the Group's capital structure,

which the Board believes will increase the financial flexibility and stability of the Group.

The Board believes that the Capital Refinancing Plan, together with the proposed joint venture announced on 27 January 2014 between the Group and an entity affiliated with The Gores Group LLC in relation to the Group's Bread Business (the "JV Transaction"), and the revised funding arrangements with the Pension Trustees, will enable the Group to pursue more effectively its category-based strategy and enhance long-term shareholder value.

As a result of the Capital Refinancing Plan being implemented, the Group's current financing facilities will be replaced and cancelled and, to the extent drawn down, prepaid in full.

The Capital Refinancing Plan is subject to the approval by Premier Foods' shareholders at a general meeting to be held at Hilton London West End, 92 Southampton Row, London WC1B 4BH at 10:00 a.m. on 20 March 2014 (the "General Meeting").  A resolution to approve the JV Transaction will also be proposed at the General Meeting.

A Prospectus in connection with the Placing and Rights Issue is expected to be published on the Company's website today.  A Circular containing a notice of General Meeting is also expected to be sent to shareholders today.

A presentation to investors and analysts will take place today, 4 March 2014, at 9.30am at The Brewery, Chiswell Street, London EC1Y 4SD. The presentation will be webcast at www.premierfoods.co.uk. A recording of the webcast will be available on the Company's website later in the day.

For further information, please contact:

Institutional investors and analysts:
Alastair Murray, Chief Financial Officer	+44 (0) 1727 815 850
Richard Godden, Head of Investor Relations	+44 (0) 1727 815 850
Media enquiries:
Richard Johnson, Group Corporate Affairs Director	+44 (0) 1727 815 850
Maitland Liz Morley Tom Eckersley	+44 (0) 20 7379 5151
Enquiries on the Capital Refinancing Plan
Jefferies International Limited Paul Nicholls Neil Collingridge Lee Morton	+44 (0) 20 7029 8000
Credit Suisse Ian Carnegie-Brown Stuart Field Kaan Kesedar	+44 (0) 20 7888 8888
HSBC Nick Donald Stuart Dickson James Horsburgh	+44 (0) 20 7991 8888

 

IMPORTANT NOTICE

The defined terms set out in the Appendix apply in this announcement.

This announcement has been issued by and is the sole responsibility of Premier Foods plc (the "Company"). A copy of the Prospectus when published will be available from the registered office of the Company and on the Company's website at www.premierfoods.co.uk provided that the Prospectus will not, subject to certain exceptions, be available (whether through the website or otherwise) to Shareholders in the United States or other Excluded Territories. Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement. The Prospectus will give further details of the Placing Shares, New Ordinary Shares, the Nil Paid Rights and the Fully Paid Rights being offered pursuant to the Placing and Rights Issue.

This announcement is not a Prospectus but an advertisement and investors should not acquire any Placing Shares, Nil Paid Rights, Fully Paid Rights or New Ordinary Shares referred to in this announcement except on the basis of the information contained in the Prospectus. The information contained in this announcement is for background purposes only and does not purport to be full or complete.  No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness.  The information in this announcement is subject to change.

Each of Credit Suisse, Jefferies, HSBC, BNP Paribas, Barclays, Investec, Shore Capital and Ondra Partners is acting for Premier Foods and no one else in connection with the Placing and the Rights Issue, and will not be responsible to anyone other than Premier Foods plc for providing the protections afforded to its clients or for providing advice in relation to the Placing and the Rights Issue or any matters referred to in this announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed on Credit Suisse, Jefferies, HSBC, BNP Paribas, Barclays, Investec, Shore Capital and Ondra Partners by FSMA or the regulatory regime established thereunder or otherwise under law, Credit Suisse, Jefferies, HSBC, BNP Paribas, Barclays, Investec, Shore Capital and Ondra Partners do not accept any responsibility whatsoever for the contents of this announcement, and no representation or warranty, express or implied, is made by Credit Suisse, Jefferies, HSBC, BNP Paribas, Barclays, Investec, Shore Capital and Ondra Partners in relation to the contents of this announcement, including its accuracy, completeness or verification or regarding the legality of any investment in the Placing Shares, the Nil Paid Rights, the Fully Paid Rights or the New Ordinary Shares by any person under the laws applicable to such person or for any other statement made or purported to be made by it, or on its behalf, in connection with Premier Foods, the Placing Shares, the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares, the Placing or the Rights Issue, and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or the future. To the fullest extent permissible Credit Suisse, Jefferies, HSBC, BNP Paribas, Barclays, Investec, Shore Capital and Ondra Partners accordingly disclaim all and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this announcement.

This announcement is for information purposes only and is not intended to and does not constitute or form part of any offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, Placing Shares, Nil Paid Rights, Fully Paid Rights or New Ordinary Shares or to take up any entitlements to Nil Paid Rights in any jurisdiction in which such an offer or solicitation is unlawful. This announcement cannot be relied upon for any investment contract or decision.

The information contained in this announcement is not for release, publication or distribution to persons in the United States, Australia, Canada, New Zealand or Japan and should not be distributed, forwarded to or transmitted in or into any jurisdiction where to do so might constitute a violation of local securities laws or regulations.

This announcement does not constitute or form part of an offer or solicitation to purchase or subscribe for securities of the Company in the United States, Australia, Canada, New Zealand or Japan. None of the Placing Shares, Nil Paid Rights, the Fully Paid Rights or the New Ordinary Shares have been or will be registered under the US Securities Act of 1933 (the "Securities Act") or under the applicable securities laws of any state or other jurisdiction of the United States or the securities legislation of any province or territory of Australia, Canada, New Zealand or Japan. Accordingly, the Placing Shares, Nil Paid Rights, the Fully Paid Rights or the New Ordinary Shares may not be offered, sold, resold, delivered or distributed, directly or indirectly, in or into the United States absent registration, or an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with state securities laws, or in or into Australia, Canada, New Zealand or Japan except in accordance with applicable law. There will be no public offer of Placing Shares, Nil Paid Rights, Fully Paid Rights or New Ordinary Shares in the United States, Australia, Canada, New Zealand or Japan.

The distribution of this announcement and/or the Prospectus and/or the Provisional Allotment Letter and/or the transfer of Nil Paid Rights, Fully Paid Rights and/or New Ordinary Shares into jurisdictions other than the United Kingdom may be restricted by law, and, therefore, persons into whose possession this announcement and/or the Prospectus and/or the Provisional Allotment Letter comes should inform themselves about and observe any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws of such jurisdiction. In particular, subject to certain exceptions, the Prospectus and the Provisional Allotment Letter should not be distributed, forwarded to or transmitted in or into the United States, Australia, Canada, New Zealand or Japan.

This announcement does not constitute a recommendation concerning the Placing and Rights Issue. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. The contents of this announcement are not to be construed as legal, business, financial or tax advice. Each Shareholder or prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

This announcement contains or incorporates by reference "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "projects", "expects", "intends", "aims", "plans", "predicts", "may", "will", "seeks", "could", "would", "shall" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts and include statements regarding the intentions, beliefs or current expectations of the Board concerning, among other things, the Company's results of operations, financial condition, prospects, growth, strategies and the industries in which the Group operates.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future or are beyond the Group's control.  Forward-looking statements are not guarantees of future performance and are based on one or more assumptions.  The Group's actual results of operations and financial condition and the development of the industries in which the Group operates may differ materially from those suggested by the forward-looking statements contained in this announcement.  In addition, even if the Company's actual results of operations, financial condition and the development of the industries in which the Group operates are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods.

Forward-looking statements appear in a number of places in this announcement and may include, among other things, statements relating to:

·      the intentions, beliefs or current expectations of the Group and/or the Directors concerning the Group's plans or objectives for future management operations, products, financial condition and results of operations;

·      the Group's ability to introduce and expand products to meet consumer demand;

·      general economic conditions in the markets in which the Group operates, including the impact of an economic downturn or growth in these areas;

·      the competitive environment and trends in the industry and markets in which the Group operates and changes in consumer behaviour;

·      the Group's exposure to environmental costs and liabilities;

·      the Group's dependence on third party suppliers for raw materials and other inputs;

·      the ability of the Group to service its indebtedness and secure long-term debt financing;

·      the ability of the Group to fund its pensions liabilities and funding deficits;

·      the ability of the Group to successfully implement cost saving and other restructuring programmes;

·      the ability of the Group to successfully implement the business plan to rationalise and re-scale the Bread Business through the proposed Joint Venture;

·      the ability of the Group's operations and businesses to improve the Group's overall EBITDA; and

·      the Group's liquidity, capital resources, working capital, cash flows and capital commitments.

The list above is not exhaustive and there are other factors that may cause the Group's actual results to differ materially from the forward-looking statements contained in this announcement.

The forward-looking statements contained in this announcement speak only as of the date of this announcement. The Company and the Directors expressly disclaim any obligations or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable law, the Prospectus Rules, the Listing Rules, the London Stock Exchange Rules or the Disclosure and Transparency Rules.

Each of the Company and the Managers and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward looking statement contained in this announcement whether as a result of new information, future developments or otherwise.

Guidance

The medium-term guidance set out in this announcement (the "Guidance") is based upon the historical audited consolidated results of the Group for the years ended 31 December 2013, 2012 and 2011. In order to prepare the Guidance, management has reviewed the historical volumes, prices, input costs and gross margin per brand to assess the basis of future growth.

If the Joint Venture is not completed, the annual reported results of the Group for its next full financial year will include the trading of the Bread Business, which will be treated as a discontinued operation.  The Guidance does not include any costs related to the Joint Venture.

The Guidance has been prepared based on a number of assumptions and estimates that, while presented with numerical specificity and considered reasonable by the Company when taken as a whole, inherently are subject to significant business, economic, competitive, regulatory and operational uncertainties, contingencies and risks, all of which are difficult to predict and many of which are beyond the control of Premier Foods. The Guidance is necessarily speculative in nature because unanticipated events and circumstances are likely to occur and, as a result, it can be expected that one or more of the assumptions underlying the Guidance may prove not to be valid. Actual results may vary from the financial forecasts and those variations may be material.

Assumptions within the control or influence of the Directors

The main assumptions within the control or influence of the Directors are:

·        there will be no material acquisitions or disposals during the financial year ending 31 December 2014 other than those already reported, including in relation to the Joint Venture;

·        investments in existing and new product lines will drive Group revenue growth; and

·        the Group will be able to reduce costs in line with expectations.

Assumptions outside the control or influence of the Directors

The main assumptions outside the control or influence of the Directors include, among others:

·        there will be no material changes to the general trading and economic conditions in each of the markets or jurisdictions in which the relevant businesses of the Group operate from that which is currently prevailing and/or anticipated by the Directors which would cause a material change in levels of demand;

·        there will be no material litigation or customer dispute that may arise in the period other than those that are currently prevailing and/or anticipated by the Company;

·        there will be no change to legislation or regulatory environments in which the relevant businesses of the Group operate that would materially impact on the operations or accounting policies of the relevant business;

·        there will be no major disruption to the relevant businesses of the Group, their suppliers or customers due to natural disasters, terrorism, extreme weather conditions, industrial disruption, civil disturbance or government action;

·        there will be no material changes in interest, inflation or exchange rates;

·        there will be no material change in the present management or control of the businesses of the Group or their existing operational strategy, other than as already reported; and

·        each of the businesses of the Group will continue to enjoy the goodwill and confidence of present and potential customers, and of its strategic partners.

The contents of the website of the Group do not form part of this announcement.

 

NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, NEW ZEALAND, JAPAN OR ANY OTHER JURISDICTION IN WHICH THE PUBLICATION, DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. OTHER RESTRICTIONS ARE APPLICABLE. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THE PRESS RELEASE.

4 March 2014

Premier Foods plc

ADDITIONAL INFORMATION REGARDING £1,128 MILLION CAPITAL REFINANCING PLAN

1.         Introduction

The Board announced today that Premier Foods proposes to raise approximately £353 million in aggregate (£344 million net of expenses) by way of a Placing at 130 pence per Placing Share raising approximately £100 million, and a 8 for 5 Rights Issue of New Ordinary Shares at a price of 50 pence per New Ordinary Share raising approximately £253 million. The Placing and the Rights Issue form part of the Group's Capital Refinancing Plan which was also announced today.

The Placing Price represents a discount of approximately 7.1 per cent. to the Closing Price of 140 pence on 3 March 2014 (being the last Business Day before the announcement of the Placing and the Rights Issue). The Rights Issue Price represents a discount of approximately 64 per cent. to the Closing Price of 140 pence on 3 March 2014 (being the last Business Day prior to the announcement of the Rights Issue) and a 38.1 per cent. discount to the theoretical ex-rights calculated by reference to the Placing Price.

2.         Background to and reasons for the Capital Refinancing Plan

The Group has recently implemented a number of measures focused on improving operating performance, stabilising the Group's balance sheet, improving liquidity and improving profitability over the medium term. Although these measures are beginning to take effect, the Group's profitability and financial flexibility remain constrained by a number of factors. In particular, the Board considers that the Group is over-leveraged as a result of past acquisitions (among other things) and that this has an adverse effect on the Group's businesses and operations, exacerbated at times by concerns as to the financial strength of the Group.

A number of measures have been pursued by the Group to improve its performance and financial position. These measures have targeted stabilisation of the balance sheet, improvements to liquidity, a reduction in net borrowings and improved profitability over the medium term, and have included the following:

·      during 2012 and 2013, the Group completed a major disposal programme exceeding its lender agreed disposal target of £330 million by nearly £40 million. The net proceeds of £369.5 million were used to reduce the Group's net debt;

·      in January 2012, the Group announced an initiative to deliver £40 million of overhead cost savings by the end of 2013 from an original SG&A cost base of £147 million in FY 2011 (restated) and the Group significantly exceeded this target by delivering savings of £48 million in FY 2012 and a further £16.1 million in FY 2013;

·      the Company has sought to generate growth momentum behind its Power Brands by increasing marketing investment and through initiating more collaborative partnerships with its key retail customers. As a result, underlying revenue for the Group increased 3.2 per cent. to £1,353.8 million with Grocery Power Brands up 4.0 per cent. in FY 2012 and a further 2.0 per cent. to £543.5 million in FY 2013;

·      during 2013, the Group completed a major restructuring of its Bread division which included the closure of three bakery sites, the consolidation of production from those locations into the remaining bread manufacturing sites, the removal of approximately 130 distribution routes, the closure of three distribution centres, and the restructuring of outsourced logistics operations to optimise the new network; and

·      following the restructuring of its Bread division and in line with the Group's strategy, the proposed sale of 51 per cent. of the Bread Business, which comprises the majority of the Group's Bread division, pursuant to the JV Transaction.

Against a challenging operating environment, the measures outlined above have enabled the Group to reduce the overall level of net debt by £119.9 million from £950.7 million as at 31 December 2012 to £830.8 million as at 31 December 2013 and to progress the implementation of its category-based strategy, which aims to drive category growth by focusing on the Group's brands, consumers, customers, costs, employees and sustainability.

The Board believes that the plans to implement this strategy are robust and that this strategy provides a credible and sustainable route to improve performance and liquidity, drive profitable growth and achieve sustainable long-term value for Shareholders and other stakeholders. However, the current significant level of indebtedness, and the terms and maturity profile of its existing financing arrangements, place a significant constraint on the Group's ability to implement its strategy. The Board believes that additional steps are required to accelerate deleveraging of the Group's balance sheet and to develop a long-term and sustainable capital structure, appropriate to the size of the Group and its strategy going forward.

Accordingly, the Board has, following engagement with a group of its core lending banks, the Pension Trustees and certain other stakeholders, developed a capital refinancing plan aimed at strengthening its capital base and financial position. The Capital Refinancing Plan (described below) will accelerate the deleveraging of the Group's balance sheet, extend the maturity profile of the Group's financing arrangements and further strengthen the Group's capital structure, thereby increasing the financial flexibility and stability of the Group and improving the credit perception of Premier Foods with suppliers and trading counterparties. The Board believes that this will, in turn, enable the Group to pursue more effectively its category-based strategy and enhance long-term shareholder value.

As part of the Capital Refinancing Plan, Premier Foods is also proposing to implement revised funding arrangements and associated matters in respect of the Pension Schemes pursuant to the New Framework Agreement. Under the terms of the New Framework Agreement, the Group will agree to pay fixed contributions to the Pension Schemes in accordance with agreed schedules of contributions resulting from the 2013 actuarial valuations. Pursuant to the New Framework Agreement, the Group and the Pension Trustees have agreed that any additional deficits that may arise at future valuation dates will only result in an increase in contributions paid by the Group on or after 1 January 2020.

Description of the Capital Refinancing Plan

Overview

The proposed Capital Refinancing Plan, which has been discussed with the Group's core lenders, the Pension Trustees and certain other stakeholders, comprises the following three components:

·      the raising of gross proceeds of approximately £353 million by way of the Placing and the Rights Issue (£344 million after deduction of estimated expenses, including underwriting commissions but excluding VAT);

·      the raising of gross proceeds of approximately £475 million by way of the issue of the New Bonds, comprising floating rate notes expected to mature in 2020 and fixed rate notes expected to mature in 2021 (£443 million after deduction of estimated expenses, including certain fees (including backstop commitment fees) but excluding VAT), with the issue of the New Bonds being backstopped so that, if it is not otherwise possible to procure sufficient investment from high yield bond investors in respect of the issue of the New Bonds, the Backstop Banks will acquire the New Bonds; and

·      the £300 million New Revolving Facility, maturing in 2019.

In aggregate, the estimated expenses of implementing the Capital Refinancing Plan (including underwriting commissions, arrangement and commitment fees, backstop fees in respect of the New Bonds and professional adviser costs, but excluding VAT) are approximately £63 million.

As a result of the Capital Refinancing Plan being implemented, the Current Facilities will be replaced and cancelled and, to the extent drawn down, prepaid in full.

Assessment of the Capital Refinancing Plan

If implemented, the Capital Refinancing Plan will deliver the Group's key objectives of:

·      accelerating the deleveraging of the Group's balance sheet; and

·      extending the maturity profile of Premier Foods's existing financing arrangements, by replacing and refinancing the Current Facilities and weighting the maturity of the Group's financing arrangements to 2018 and beyond. In this context, the Capital Refinancing Plan is expected to provide the Group with greater long-term certainty, flexibility and balance sheet strength, together with improved liquidity and covenant headroom.

The Capital Refinancing Plan will also facilitate, and allow the Group to focus its efforts on, the implementation of its category-based strategy. The Board considers that successful delivery of the Group's category-based strategy, in combination with the implementation of the Capital Refinancing Plan, will enable Premier Foods to grow its businesses and generate increased surplus cash flow with a view to further deleveraging the Group, while providing a platform for the Group to resume dividend payments in the future. The Board also believes that the delivery of a strengthened capital base and financial position will improve the credit perception of Premier Foods with suppliers and trading counterparties.

The Board, having carefully considered the available alternatives, believes that the Capital Refinancing Plan is the optimal solution available at present to address the Group's objectives.

Use of proceeds

As a result of the Capital Refinancing Plan being implemented, the Current Facilities will be cancelled and replaced and, to the extent drawn down, repaid in full.

Premier Foods therefore intends to use the net proceeds from the Placing and the Rights Issue, and the issue of the New Bonds, and for the drawings under the New Revolving Facility (£116 million) in aggregate to prepay in full the amounts drawn down under the Current Facilities (as at the Reference Date, £886 million was outstanding under the Current Facilities) with any remaining net proceeds being used for general corporate purposes, including to provide additional working capital.

Following the implementation of the Capital Refinancing Plan, although the blended interest rate is likely to be higher, the balance sheet of the Group will be stronger, with a significantly reduced level of net indebtedness by virtue of having raised additional equity, as well as an extended maturity profile on its debt.

3.         Structure and principal terms and conditions of the Placing and Rights Issue

Introduction

The Company proposes to raise gross proceeds of approximately £353 million by way of the Placing and the Rights Issue. The Board has considered the best way to structure the proposed equity capital raising in light of the Capital Refinancing Plan. The decision to structure the equity capital raising by way of a combination of a Placing and a Rights Issue takes into account a number of factors, including the total net proceeds to be raised. The Board believes that the Placing as part of the Capital Refinancing Plan, enables the Company to satisfy demand from potential new investors as well as current Shareholders wishing to increase their positions. While recognising the importance of pre-emption rights, and after consultation with certain major Shareholders, the Board believes that to attract new investors the equity capital raising structure needs to include a firm allocation of Ordinary Shares under the Placing to Placees combined with the ability for Placees to participate in the Rights Issue. The Board has sought to restrict the size of the Placing in order to minimise the dilution to existing Shareholders who do not participate in the Placing and is also seeking the approval of Shareholders to the proposed equity capital raising structure, including this non pre-emptive element, by way of a special resolution.

Pricing

The Placing Price represents a 7.1 per cent. discount to the Closing Price of 140 pence on 3 March 2014 (being the last Business Day before the announcement of the Placing and the Rights Issue). The Placing Price (including the size of the Placing discount) has been determined, following discussions with both existing Shareholders and Placees, to be at the level which the Board considers necessary to ensure the success of the Placing and the Rights Issue, taking into account the aggregate proceeds to be raised. The Board believes that the Placing Price and the discount which it represents are appropriate. The Rights Issue Price represents a 64 per cent. discount to the Closing Price of 140 pence on 3 March 2014, and a 38.1 per cent. discount to the theoretical ex-rights price calculated by reference to the Placing Price.

Dilution

The Placing will: (i) result in 76,923,077 Placing Shares being issued and the number of Ordinary Shares being increased from a total of 239,842,255 Ordinary Shares (as at the Reference Date) to a total of 316,765,332 Ordinary Shares, representing an increase of 32 per cent.; and (ii) reduce the proportional ownership and voting interest in the Ordinary Shares of the Shareholders who do not participate in the Placing (as at the Reference Date) by 24.3 per cent.

The Rights Issue will result in 506,824,531 New Ordinary Shares being issued and the number of Ordinary Shares being increased from a total of: (i) 239,842,255 Ordinary Shares to a total of 746,666,786 Ordinary Shares (disregarding the issue of the Placing Shares), representing an increase of 211.3 per cent.; or (ii) 316,765,332 Ordinary Shares (taking into account the issue of the Placing Shares) to a total of 823,589,863 Ordinary Shares, representing an increase of 160.0 per cent. If a Qualifying Shareholder does not take up any New Ordinary Shares under the Rights Issue and does not participate in the Placing, such Qualifying Shareholder's shareholding in the Company will be diluted by up to 71 per cent. as a result of the Placing and the Rights Issue. Furthermore, Qualifying Shareholders who take up their entitlements in full in respect of the Rights Issue and do not participate in the Placing will be diluted by up to 24.3 per cent. as a result of the Placing.

Further details of the Placing and Rights Issue are set out in the Appendix.

4.         Current trends, trading and outlook

The Group reported a strong underlying trading profit performance of approximately 18 per cent. growth in 2013, and significant underlying earnings progression. Through its category-based strategy, the Group delivered Grocery Power Brands sales growth of approximately 2.0 per cent. in 2013, strong market share performances and progressively stronger customer partnerships. The Group continues to reduce business complexity through a disciplined approach to its cost base and has successfully reduced net debt by approximately £120 million during the year.

The simplification of the Group through the Joint Venture and the Capital Refinancing Plan announced today represent significant steps forward for Premier Foods. Completion of these projects will allow Management to focus its full attention on the Grocery business, which the Board believes is well positioned to deal with the challenges of 2014.

The Group expects Grocery Power Brand sales to be slightly negative in Q1 2014 compared to Q1 2013, reflecting the colder weather in the prior period which supported strong sales, the move of Easter from Q1 2013 to Q2 2014 and subdued consumer spending in the grocery market. Grocery Power Brand sales are expected to improve in Q2 2014 and into the second half of 2014, reflecting planned new product introductions, increased consumer marketing, and assuming a return to more typical average summer temperatures. For the full year 2014, the Board is targeting Grocery Power Brand sales growth in the range of 2 to 3 per cent.. Support brands are expected to grow modestly in 2014 as a result of targeted marketing activity while non-branded sales will decline reflecting the Group's focus on higher margin branded sales. The Group continues to manage costs tightly and remains confident in its expectations for the full year 2014.

Total cash interest expense for 2014 is expected to be in the range of £45 to £50 million[1], which is dependent upon the pricing of the New Bonds and drawings under the New Revolving Facility, and pension deficit contributions are expected to be approximately £35 million under the New Framework Agreement. The Group did not pay any corporation tax in 2013 as a result of utilising a portion of the brought forward losses available to it and does not expect to pay corporation tax in the medium-term due to additional brought forward losses. In 2014, depreciation is expected to be in the range of £18 to £20 million, and the Group expects a working capital cash outflow of approximately £30 million and a double-digit percentage increase in consumer marketing expenditure from 2013 levels. Capital expenditure for 2014 is expected to be in the range of £35 to 40 million, approximately half of which is attributable to a major investment in a new cake slices snack-pack line at the Group's cake factory in Carlton, Barnsley. Over the medium-term, ongoing capital expenditure is expected to be broadly in line with depreciation.

Over the medium term, the Group is targeting Grocery Power Brand revenue growth of between 2 per cent. and 3 per cent. per annum and total branded revenue growth of one to two per cent.. The Group continues to work on reducing complexity in the business through SKU reductions and rationalising its supplier base and this, together with mix benefits, means that it is targeting gross margin to grow faster than revenues. The Group is targeting double-digit percentage increase in marketing investment funded through continued reductions in costs. The Group is targeting a progressive deleveraging towards 2.5 times net debt to EBITDA in the medium-term.

The Group has decided to change its financial year end from 31 December to 31 March and will therefore prepare its next annual financial statements for the 15 months ended 31 March 2015. It plans to report on the Group's trading performance by way of an Interim Management Statement for the 12 months ended 31 December 2014 in early 2015.

5.         Dividend policy

No dividends have been paid by Premier Foods since July 2008. Further, the Current Facilities Agreement does not permit Premier Foods, and the New Facility Agreement and the New Bonds will impose certain restrictions on Premier Foods's ability, to make dividend payments. Under the indenture for the New Bonds, the Company will, from the date on which the proceeds of the New Bonds are released from escrow, be restricted in certain circumstances from making dividend payments and certain other restricted payments although the restrictions are subject to exceptions, baskets and thresholds. Under the New Facility Agreement, a dividend would be permitted once the leverage ratio of the Group is equal to or less than 3.0:1, provided that no default has occurred and is continuing under the New Facility Agreement or would result from the payment of the dividend, and the payment of a dividend would be permitted under the New Bonds.

Once Premier Foods is permitted to make dividend payments, its ability to do so will depend on (among other things) improved financial performance.

The Board understands the importance of optimising value for Shareholders and believes that implementation of the Capital Refinancing Plan will provide a platform for reinstating the payment of dividends in the future, which the Board will do when it becomes appropriate and permissible to do so.

Pursuant to the terms of the New Framework Agreement, if Premier Foods makes any return to its shareholders generally (including by way of a payment of a dividend or share buy-back) on or before 31 December 2019 (including for this purpose any dividend which is declared but not paid before 31 December 2019), the Group will be required to make additional cash contributions to the Relevant Pension Schemes on a £1 for £1 basis (with allocation between the Relevant Pension Schemes being as set out in the New Framework Agreement), provided that, if Premier Foods makes a return to its shareholders (i) in 2016 or (ii) in 2017, the first £10 million paid to shareholders in each of those years will be exempt from the operation of the dividend match described above.

6.         Directors' intentions

Each of the Directors who is (or expects to be, at the relevant record time) a Shareholder has confirmed his/her intention to (i) vote in favour of the resolutions to be proposed at the General Meeting to approve the Rights Issue and Joint Venture, and (ii) take up in full his or her entitlement to subscribe for New Ordinary Shares under the Rights Issue, comprising 1,148,273 Existing Ordinary Shares in aggregate, representing in aggregate 0.5 per cent. of the issued share capital of the Company as at the Reference Date.

7.         Major Shareholders and Related Party Transactions

Major shareholders

Warburg Pincus has confirmed to the Company its intention to subscribe for 13,333,755 Placing Shares at the Placing Price and to fully take up its entitlements under the Rights Issue (including in respect of such Placing Shares). In addition, Warburg Pincus has signed an irrevocable undertaking to vote in favour of the Resolutions at the General Meeting.

Warburg Pincus is a related party of the Company for the purposes of the Listing Rules as it is a substantial shareholder of the Company which is entitled to exercise, or control the exercise of, 17.3 per cent. or more of the votes able to be cast at general meetings of the Company. The aggregate value of Placing Shares to be issued to Warburg Pincus at the Placing Price is approximately £17,333,882, and the issue of such Placing Shares to Warburg Pincus is a transaction of sufficient size to require Shareholder approval under the Listing Rules. Accordingly, the approval of the Independent Shareholders to the Related Party Resolution is sought at the General Meeting. Warburg Pincus will not vote, and has undertaken to take all reasonable steps to ensure that its associates do not vote, on the Related Party Resolution.

Warburg Pincus and the Company have agreed that the terms of their existing relationship agreement (the "Relationship Agreement") shall cease to have effect from the date of this announcement and shall terminate automatically upon completion of the Capital Refinancing Plan. Warburg Pincus and the Company have also agreed that the Relationship Agreement shall continue in full force and effect if the Capital Refinancing Plan does not complete.

Charles Miller Smith, a Director, was appointed to the Board by Warburg Pincus pursuant to its rights under the Relationship Agreement. On termination of the Relationship Agreement, Charles Miller Smith will cease to be a nominee of Warburg Pincus.  However, the Board has asked him to remain as a Director, independent of Warburg Pincus, on account of his beneficial knowledge and experience (in which case, he would stand for re-election at the next annual general meeting of the Company).

Each of Paulson and Cazenove has signed an irrevocable undertaking to vote in favour of the Resolutions at the General Meeting.  In addition:

·      Paulson has confirmed to the Company its intention to subscribe for 7,697,366 Placing Shares at the Placing Price and to take up its entitlements under the Rights Issue (including in respect of its Placing Shares) in respect of 50,661,434 Rights Issue Shares; and

·      Cazenove has confirmed to the Company its intention to subscribe for 7,664,759 Placing Shares at the Placing Price and to fully take up its entitlements under the Rights Issue (including in respect of such Placing Shares).

Paulson is a related party of the Company for the purposes of the Listing Rules as it is a substantial shareholder of the Company which is entitled to exercise, or control the exercise of, 10 per cent. or more of the votes able to be cast at general meetings of the Company. The aggregate value of Placing Shares to be issued to Paulson is approximately £10,006,576.  This transaction is not of sufficient size to require Shareholder approval under the Listing Rules.

Directors

The following Directors have each confirmed their intention to participate in the Placing and to acquire Placing Shares at the Placing Price, as follows:

Director	Number of Placing Shares	Aggregate value of Placing Shares at the Placing Price
Alastair Murray	119,047	£154,761
Gavin Darby	240,769	£313,000
David Beever	11,538	£14,999
Jennifer Laing	5,000	£6,500
Ian Krieger	20,000	£26,000
Pam Powell	33,076	£42,999
Charles Miller Smith	76,923	£100,000
David Wild	25,000	£32,500

 

Each of the Directors set out above is a related party of the Company due to his or her directorship in the Company. None of these related party transactions is of sufficient size to require Shareholder approval under the Listing Rules or to require a confirmation to the UK Listing Authority from the Joint Sponsors that their terms are fair and reasonable.

8.         General Meeting

The General Meeting will be held at Doubletree by Hilton London West End, 92 Southampton Row, London WC1B 4BH at 10:00 a.m. on 20 March 2014.  The Circular containing the notice convening the General Meeting is expected to be published on the same day as this announcement.

9.         Working Capital

In the opinion of the Company, taking into account the net proceeds of the Capital Refinancing Plan, the working capital available to the Group is sufficient for its present requirements, that is for at least 12 months following the date of publication of the prospectus.

10.       Further information

An expected timetable of principal events in connection with the Placing and Rights Issue is set out in the Appendix.  In addition, further details of the Capital Refinancing Plan are set out in the Appendix and in the Circular and the Prospectus, each of which is expected to be published on Premier Foods' website on or about the date of this announcement.  The Circular also contains further details of the JV Transaction.

The Board considers that the Joint Venture and the Placing and the Rights Issue are in the best interests of the shareholders of Premier Foods taken as a whole and recommends that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, as the Directors intend to do in respect of their own beneficial holdings, which amount in aggregate to 1,148,273 Ordinary Shares and represent approximately 0.5 per cent. of Premier Foods's issued share capital as at the Reference Date.

 

Appendix

1.         Expected timetable of principal events

Each of the times and dates in the table below is indicative only and may be subject to change.  Please read the notes for this timetable set out below.

 

Announcement of the JV Transaction	27 January 2014
Latest time and date for receipt of Forms of Proxy	11.00 a.m. on 18 March 2014
General Meeting	10.00 a.m. on 20 March 2014
Conditional allotment of Placing Shares	20 March 2014
Record Date for entitlement under the Rights Issue for Qualifying Shareholders	after the conditional allotment of Placing Shares on 20 March 2014
Provisional Allotment Letters personalised and despatched (to Qualifying Non-CREST Shareholders only)	21 March 2014
Allotment of Placing Shares becomes unconditional and issue and settlement of Placing Shares	8.00 a.m. on 24 March 2014
Placing Admission and dealings in Placing Shares, fully paid, commence on the London Stock Exchange	8.00 a.m. on 24 March 2014
Admission and dealings in New Ordinary Shares, nil paid, commence on the London Stock Exchange and Ordinary Shares marked "ex-rights"	8.00 a.m. on 24 March 2014
Nil Paid Rights credited to stock accounts in CREST (of Qualifying CREST Shareholders and of the Placees)	as soon as possible after 8.00 a.m. on 24 March 2014
Nil Paid Rights and Fully Paid Rights enabled in CREST	as soon as possible after 8.00 a.m. on 24 March 2014
Recommended latest time for requesting withdrawal of Nil Paid Rights and Fully Paid Rights from CREST (i.e. if your Nil Paid Rights or Fully Paid Rights are in CREST and you wish to convert them to certificated form)	4.30 p.m. on 1 April 2014
Latest time for depositing renounced Provisional Allotment Letters, nil or fully paid, into CREST or for dematerialising Nil Paid Rights or Fully Paid Rights into a CREST stock account (i.e. if your Nil Paid Rights or Fully Paid Rights are represented by a Provisional Allotment Letter and you wish to convert them to uncertificated form)	3.00 p.m. on 2 April 2014
Latest time and date for splitting Provisional Allotment Letters, nil or fully paid	3.00 p.m. on 3 April 2014
Latest time and date for acceptance, payment in full and registration of renunciation of Provisional Allotment Letters	11.00 a.m. on 7 April 2014
Announcement of results of the Rights Issue	by 8.00 a.m. on 8 April 2014
Dealings in New Ordinary Shares, fully paid, commence on the London Stock Exchange	by 8.00 a.m. on 8 April 2014
New Ordinary Shares credited to CREST stock accounts	as soon as possible after 8.00 a.m. on 8 April 2014
Expected Completion Date of Capital Refinancing Plan	14 April 2014
Despatch of definitive share certificates for the New Ordinary Shares in certificated form	not later than 15 April 2014
Expected date of completion of the JV Transaction	26 April 2014

 

Notes:

1.     The ability to participate in the Placing and the Rights Issue is subject to certain restrictions relating to Shareholders with registered addresses outside the United Kingdom, details of which are set out in Part V (Terms and Conditions of the Rights Issue) of the Prospectus.

2.     These times and dates and those mentioned throughout this announcement, the Circular, the Prospectus and the Provisional Allotment Letter may be adjusted by Premier Foods in consultation with the Joint Bookrunners, in which event details of the new times and dates will be notified to the UK Listing Authority, the London Stock Exchange and, where appropriate, Qualifying Shareholders and Placees.

3.     References to times in this timetable are to London time.

 

2.         Inter-conditionality of the Capital Refinancing Plan

The Placing and the Rights Issue are conditional upon Placing Admission and Admission becoming effective by not later than 8.00 a.m. on 24 March 2014 (or such later date as the Company and the Joint Bookrunners may agree). In addition, the Placing and the Rights Issue are conditional upon (i) the Shareholders passing the Capital Refinancing Resolutions at the General Meeting and (ii) the fulfilment, by Admission, of all conditions precedent in relation to the issue of the New Bonds, and release of the proceeds of the issue of the New Bonds from escrow and the availability of the New Revolving Facility (other than any steps which are purely procedural in nature or which relate specifically to the inter-conditionality of the Capital Refinancing Plan described in this section).

The release of proceeds from the issue of the New Bonds from escrow (the issue of which will be backstopped so that, if it is not otherwise possible to procure sufficient investment from high yield bond investors in respect of the issue of the New Bonds, the Backstop Banks will acquire the New Bonds), the availability of the New Revolving Facility, and the modified funding arrangements and associated matters in relation to the Pension Schemes pursuant to the New Framework Agreement are conditional on the completion of the Placing and the Rights Issue.

The New Revolving Facility will be available following (among other things) receipt by the facility agent of evidence that: (i) the Company has received net proceeds from the Placing and Rights Issue and the issue of the New Bonds (including where the New Bonds have been acquired by the Backstop Banks pursuant to the backstop commitment) such that, together with the New Revolving Facility, there will be an aggregate amount of £1,128 in gross proceeds from the various elements of the Capital Refinancing Plan available to the Group; and (ii) the amount of those proceeds will be utilised in prepayment and cancellation of the Current Facilities in full.

The revised funding arrangements with the Pension Trustees in respect of the Relevant Pension Schemes pursuant to the terms of the New Framework Agreement are conditional upon successful implementation of the Capital Refinancing Plan.

3.         Further details on the Capital Refinancing Plan

General

The Placing and the Rights Issue are fully underwritten by the Underwriters on the terms and conditions of the Underwriting Agreement and are conditional upon (i) the Underwriting Agreement having become unconditional in all respects (save for the condition relating to Placing Admission and Admission) and (ii) Placing Admission and Admission becoming effective by not later than 8.00 a.m. on 24 March 2014 (or such later date as the Company and the Joint Bookrunners may agree).

An application will be made to the UK Listing Authority for the Placing Shares and the New Ordinary Shares to be admitted to listing on the premium segment of the Official List and an application will be made to the London Stock Exchange for the Placing Shares and the New Ordinary Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Placing Admission and Admission will become effective, and dealings in the Placing Shares and New Ordinary Shares (nil paid) will commence, at 8.00 a.m. on 24 March 2014 (being the second Business Day after the General Meeting). Placing Admission and Admission will take place simultaneously.

The Placing Shares and the New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with, and will carry the same voting and dividend rights as, the Existing Ordinary Shares.

Placing

Under the Placing, the Joint Bookrunners have agreed to procure Placees for an aggregate of 76,923,077 Placing Shares at a Placing Price of 130 pence per Placing Share. The Placing is expected to raise gross proceeds of £100 million.

The Rights Issue

Subject to, among other things, the conditions described in Part V (Terms and Conditions of the Rights Issue) of the Prospectus, the offer of the New Ordinary Shares under the Rights Issue will be made on the following basis:

8 New Ordinary Shares at 50 pence for every 5 Existing Ordinary Shares

held by (i) Qualifying Shareholders on the Record Date and so in proportion to any other number of Ordinary Shares each Qualifying Shareholder then holds and (ii) Placees as a result of the Placing and so in proportion to any number of Ordinary Shares such Placees would have held on the Record Date if the Placing had occurred immediately prior to the Record Date.

The Rights Issue Price represents:

·      a 38.1 per cent. discount to the theoretical ex-rights price calculated by reference to the Placing Price; and

·      a 64 per cent. discount to the Closing Price of 140 pence on 3 March 2014 (being the last Business Day before the announcement of the Placing and the Rights Issue).

Further details of the terms and conditions of the Rights Issue, including the procedure for acceptance and payment and the procedure in respect of rights not taken up, are set out in the Prospectus.

Overseas Shareholders should refer to the Prospectus for further information regarding their ability to participate in the Rights Issue.

The New Facility Agreement and the New Bonds

As part of the Capital Refinancing Plan, the Company has entered into the New Facility Agreement with a syndicate of lenders.

Utilisations under the New Facility Agreement, together with the proceeds of the Placing and the Rights Issue and the issue of New Bonds, will be applied to refinance the Current Facilities.

The New Facility Agreement will make available a £300 million New Revolving Facility. The New Revolving Facility will be available following (among other things) receipt by the facility agent of evidence that (i) the Company has received net proceeds from the Rights Issue and Placing and the issue of the New Bonds (including where the New Bonds have been acquired by the Backup Banks) such that, together with the New Revolving Facility, there will be an aggregate amount of £1,128 million in net proceeds from the various elements of the Capital Refinancing Plan available to the Group and (ii) the necessary amount of those proceeds will be utilised in prepayment and cancellation of the Current Facilities in full.

The Group will seek to raise £475 million (£443 million net of estimated expenses) through the offer and issue of the New Bonds. The New Bonds will be backstopped so that, if it is not otherwise possible to procure sufficient investment from the relevant high yield bond markets in respect of the issue of the New Bonds, the Backstop Banks will acquire the New Bonds.

The New Revolving Facility and the New Bonds will be guaranteed by the Company and certain material subsidiaries of the Company from the date on which the proceeds of the New Bonds are released from escrow. The New Revolving Facility under the New Facility Agreement and the New Bonds will be secured on a pari passu basis by first ranking fixed charges over certain real estate and certain intellectual property rights, floating charges over all of the assets of each of the material subsidiaries of the Company, and share security over the shares in each of the material subsidiaries of the Company, which will become effective from the date on which the proceeds of the New Bonds are released from escrow. This security will be shared with certain hedging banks, the Pension Trustees up to a maximum aggregate secured amount of £450 million (such amount to amortise after 1 April 2016 as a result of all the cash contributions made to the RHM Pension Scheme and cash contributions from disposal proceeds applied to the Premier Foods Foods Pension Scheme and the Premier Foods Grocery Products Pension Scheme, subject to a minimum aggregate secured amount for the Pension Schemes of £350 million), and lenders and related finance parties in respect of certain permitted refinancing indebtedness utilised to refinance existing secured indebtedness.

Pension funding arrangements with pension schemes

As part of the Capital Refinancing Plan, Premier Foods has agreed with the Pension Trustees revised schedules of contributions, associated funding arrangements and other matters pursuant to the New Framework Agreement in respect of the Pension Schemes. The New Framework Agreement is in respect of the 2013 triennial valuations and will become effective upon the successful implementation of the Capital Refinancing Plan.

The agreement provides certainty on pension contributions over the medium term in that they will not be altered until the end of 2019. The agreed contributions are deficit payments totalling £33.4 million in 2014, £7 million in 2015, £40 million in 2016, £47.5 million in 2017, £42.5 million in 2018, £40 million in 2019, £50 million in each year from 2020 to 2022 and £60 million per annum from 2023, increasing at 3 per cent. per annum until the scheduled contributions are expected to end in 2032. When the Irish Pension Schemes' contributions of £2 million per annum until 2022 are added to the revised contributions schedule, the Group expects to make cash contributions in aggregate of £35.4 million in 2014, £9 million in 2015, £42 million in 2016, £49.5 million in 2017, £44.5 million in 2018, £42 million in 2019, £52 million in each year from 2020 to 2022 and £60 million in 2023, increasing by 3 per cent. per annum until the scheduled contributions are expected to end in 2032. Premier Foods will pay administration costs and Pension Protection Fund levies in addition. A breakdown of the agreed contributions under the revised funding arrangement between the Pension Schemes is set out below:

 

			Contributions under revised funding arrangements
Year	Total contributions agreed under 2012 Pensions Agreement	Total contributions under revised funding arrangements	RHM Pension Scheme (£ millions)	Premier Foods Pension Scheme	Premier Foods Grocery Products Pension Scheme
2014	81.33	33.44	20.63	11.91	0.90
2015	78.40	7.00	-	6.30	0.70
2016	77.17	40.00	-	36.00	4.00
2017	44.79	47.50	-	42.75	4.75
2018	44.79	42.50	-	38.25	4.25
2019	44.79	40.00	12.00	25.20	2.80
2020	44.79	50.00	20.00	27.00	3.00
2021	44.79	50.00	20.00	27.00	3.00
2022	11.20	50.00	20.00	27.00	3.00
2023		60.00*	24.00*	32.40*	3.60*

 

* Contributions increase after 2023 at 3 per cent. per annum until the scheduled contributions are expected to end in 2032.

The technical provisions deficit in respect of the Pension Schemes at the 2013 valuations was £1,041.7 million and, including the Irish Pension Schemes, an approximate deficit valuation of £1,061 million. The contributions meet a funding requirement of less than the technical provisions deficit which reflects both a partial allowance for improvements in market conditions for the Premier Foods Pension Scheme and the Premier Grocery Products Pension Scheme since the valuation date and a future prudent allowance for returns on all the pension schemes' investments.

The Pension Schemes will also receive cash contributions from the Group on a £1 for £1 basis (with allocation between the Pension Schemes being as set out in the New Framework Agreement) in respect of dividends paid before 31 December 2019, save for the first £10 million of any dividends paid in each of 2016 and 2017, which will be exempt from the dividend match described above.

Pursuant to the New Framework Agreement, the Pension Schemes will be granted security up to a maximum aggregate secured amount of £450 million (such amount to amortise after 1 April 2016 as a result of all cash contributions made to the RHM Pension Scheme and cash contributions from disposal proceeds (if any) applied to the Premier Foods Pension Scheme and the Premier Grocery Products Pension Scheme, subject to a minimum aggregate secured amount for the Pension Schemes of £350 million). The security will be shared on a pari passu basis by, among others, the holders of the New Bonds, the finance parties under the New Facility Agreement, certain hedging banks and lenders and related finance parties in respect of certain permitted refinancing indebtedness utilised to refinance existing secured indebtedness.

 

4.         Definitions

The definitions set out below apply throughout this announcement unless the context requires otherwise:

"Admission"	admission of the New Ordinary Shares (nil paid or fully paid, as the case may be) to the premium segment of the Official List and to trading on the main market for listed securities of the London Stock Exchange;
"Backstop Banks"	Barclays, BNP Paribas, Credit Suisse and HSBC;
"Board"	the board of directors of Premier Foods from time to time;
"Bread Business"	the business undertaken by the Group in relation to the manufacture and supply of products in: (i) the wrapped bread and morning goods categories; and (ii) the bulk and bag flour, wheat flake and other baking mixes categories, but excluding the Charnwood Foods Business and the Retained Flour Business, as more particularly described in the HDA;
"BNP Paribas"	BNP Paribas of 16, boulevard des Italiens, 75009 Paris, France;
"Business Day"	any day on which banks are generally open in London for the transaction of business other than a Saturday or Sunday or public holiday;
"Capital Refinancing Resolutions"	the Related Party Resolution and the Placing and Rights Issue Resolution;
"certificated" or "in certificated form"	refers to a share or other security which is not in uncertificated form (that is not in CREST);
"Charnwood Foods Business"	the business which is undertaken by the Group in relation to the manufacture and supply of pizza base products;
"Circular"	the circular convening the General Meeting to be sent to Shareholders on or around the date of this announcement;
"Closing Price"	the closing, middle market quotation of an Existing Ordinary Share, as published in the Daily Official List;
"Companies Act 2006"	the Companies Act of England and Wales 2006, as amended;
"Credit Suisse"	Credit Suisse Securities (Europe) Limited of One Cabot Square, London E14 4QJ;
"CREST"	the system for the paperless settlement of trades in securities and the holding of uncertificated securities in accordance with the CREST Regulations operated by Euroclear UK;
"CREST Regulations"	the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended from time to time;
"CREST Shareholders"	Shareholders holding Ordinary Shares in uncertificated form;
"Current Facilities"	the Current Term Facilities and the Current Revolving Facility;
"Current Facilities Agreement"	the agreement entered into among Premier Foods, certain of its subsidiaries as borrowers and guarantors and certain financial institutions relating to the Current Term Facilities and the Current Revolving Facility, further details of which are set out in section 21.1 of Part X (Additional Information) of the Prospectus;
"Current Revolving Facility"	the multicurrency revolving credit facility available under the Current Facilities Agreement (being £500 million in aggregate as at 30 March 2012) which is available in part by way of ancillary facilities, including by way of letters of credit, up to a maximum amount of £125,000,000;
"Current Term Facilities"	each of the term facilities available under the Current Facilities Agreement (being £921 million in aggregate as at 30 March 2012);
"Daily Official List"	the daily official list of the London Stock Exchange;
"Directors"	the directors of Premier Foods as at the date of this document, and "Director" means any one of them;
"Disclosure and Transparency Rules"	the disclosure rules and transparency rules made under Part VI of FSMA (as set out in the FCA Handbook), as amended;
"Euroclear UK"	Euroclear UK & Ireland Limited, the operator of CREST;
"Excluded Shareholders"	subject to certain exceptions, Shareholders who have registered addresses in, or who are otherwise resident in or located in, the United States or any other Excluded Territory;
"Excluded Territories"	Australia, Canada, Japan, New Zealand, the United States and any other jurisdiction where the extension or availability of the Placing and/or the Rights Issue (and any other transaction contemplated thereby) would breach any applicable law or regulation;
"Existing Ordinary Shares"	in relation to a particular date, the Ordinary Shares existing as at that date;
"FCA" or "Financial Conduct Authority"	the Financial Conduct Authority of the United Kingdom;
"Form of Proxy"	the hard copy form of proxy for use at the General Meeting;
"FSMA"	the Financial Services and Markets Act 2000, as amended;
"Fully Paid Rights"	rights to acquire New Ordinary Shares, fully paid;
"General Meeting"	the general meeting of Premier Foods to be convened pursuant to the Notice in order to (among other things) approve the JV Transaction and the Placing and the Rights Issue;
"Gores"	Bakers Holdings (Luxembourg) S.à.r.L, an indirect wholly owned subsidiary of The Gores Group LLC;
"Group"	Premier Foods, together with its subsidiaries and subsidiary undertakings from time to time;
"Hive-Down"	the transfer of the Bread Business to Hovis Limited, pursuant to and on the terms of the HDA;
"HDA"	the hive-down agreement entered into on 27 January 2014 between Premier Foods and Hovis Limited;
"Hovis Holdings"	Hovis Holdings Limited, a company incorporated in England and Wales with registered number 8846818;
"Hovis Limited"	a wholly owned subsidiary of Hovis Holdings Limited, incorporated in England and Wales with registered number 8846838;
"HSBC"	HSBC Bank plc of Canada Square, London E14 5HQ;
"Investment"	the subscription by Gores for shares in Hovis Holdings representing 51 per cent. of Hovis Holdings' total issued share capital, pursuant to and on the terms of the SA;
"Jefferies"	Jefferies International Limited of Vintners Place, 68 Upper Thames Street, London EC4V 3BJ;
"Joint Bookrunners"	Credit Suisse, Jefferies, HSBC and BNP Paribas;
"Joint Sponsors"	Credit Suisse and Jefferies;
"Joint Venture" or "JV"	the joint venture between Premier Foods and Gores with respect to the Bread Business established pursuant to the JV Transaction and the terms of the JV Agreements;
"JV Agreements"	the HDA, SA and SHA;
"JV Resolution"	the ordinary resolution in respect of the Joint Venture to be proposed at the General Meeting;
"JV Transaction"	the transaction pursuant to which it is intended that the Bread Business will be managed as a joint venture between Premier Foods and Gores, to be effected pursuant to the Hive-Down and the Investment and the terms of the JV Agreements summarised in Part III of this document, to be approved by Shareholders at the General Meeting;
"Listing Rules"	the listing rules made under Part VI of FSMA (as set out in the FCA Handbook), as amended;
"London Stock Exchange"	London Stock Exchange Group plc or its successor(s);
"New Bonds"	the high yield bonds due 2020/2021 that may be issued by the New Bonds Issuer on or before Placing Admission and Admission, further details of which are set out in section 21.3 of Part X (Additional Information) of the Prospectus;
"New Bonds Issuer"	Premier Foods Finance plc, the proposed issuer of the New Bonds;
"New Bonds Trustee"	HSBC Corporate Trustee Company (UK) Limited, the trustee of the New Bonds;
"New Facility Agreement"	the agreement entered into among the Company, certain of its subsidiaries as borrowers and guarantors and certain financial institutions relating to the New Revolving Facility, further details of which are set out in section 21.2 of Part X (Additional Information) in the Prospectus;
"New Framework Agreement"	the pensions framework agreement entered into on or around the date of this document between Premier Foods and the Pension Trustees;
"New Intercreditor Agreement"	the intercreditor agreement entered into between, among others, the Company and certain of its subsidiaries, the lenders under the New Facility Agreement, the New Bonds Trustee, the Pension Trustees and the counterparties in relation to certain hedging arrangements;
"New Ordinary Shares"	the Ordinary Shares to be issued by Premier Foods pursuant to the Rights Issue;
"New Revolving Facility"	the £300 million multicurrency revolving credit facility available under the New Facility Agreement, which is available in part by way of ancillary facilities, including by way of letters of credit, up to a maximum amount of £80 million and which may be increased by up to £50 million by means of an accordion facility;
"Nil Paid Rights"	rights to subscribe for New Ordinary Shares, nil paid;
"Official List"	the official list of the UK Listing Authority;
"Ondra Partners"	Ondra LLP;
"Ordinary Shares"	the ordinary shares of 10p each in the share capital of Premier Foods;
"Overseas Shareholders"	Shareholders with registered addresses outside the United Kingdom or who are incorporated in, registered in or otherwise resident or located in, countries outside the United Kingdom;
"PD Amending Directive"	directive 2010/73/EU of the European Parliament and of the Council;
"Premier Foods" or the "Company"	Premier Foods plc, a company incorporated in England and Wales with registered number 05160050, whose registered office is at Premier House, Centrium Business Park, Griffiths Way, St Albans, Hertfordshire AL1 2RE, or, in the case of the JV Agreements, Premier Foods Group Limited, a company incorporated in England and Wales with registered number 00281728, whose registered office is at Premier House, Centrium Business Park, Griffiths Way, St Albans, Hertfordshire AL1 2RE;
"Premier Foods Pension Scheme"	the occupational pension scheme known as the Premier Foods Pension Scheme which as at the date of this document is governed by a trust deed dated 16 October 2012 and rules adopted thereunder, in each case as subsequently amended;
"Premier Foods Grocery Products Pension Scheme"	the occupational pension scheme known as the Premier Grocery Products Pension Scheme which as at the date of this document is governed by a definitive trust deed dated 6 September 1999, as subsequently amended;
"Pension Schemes"	the Premier Foods Pension Scheme, the Premier Foods Grocery Products Pension Scheme and the RHM Pension Scheme;
"Pension Trustees"	each of the trustees of the Pension Schemes, being Premier Foods Pension Schemes Trustees Limited, Premier Foods Grocery Products Pension Scheme Trustees Limited and RHM Pension Trust Limited respectively;
"Placees"	those persons with whom Placing Shares are placed;
"Placing"	the placing of Placing Shares, as described in this document;
"Placing Admission"	admission of the Placing Shares to the premium segment of the Official List and to trading on the main market for listed securities of the London Stock Exchange;
"Placing and Rights Issue Resolution"	the special resolution in respect of, among other things, the Placing and the Rights Issue, being Resolution 2 to be proposed at the General Meeting;
"Placing Price"	130 pence per Placing Share;
"Placing Shares"	the Ordinary Shares to be issued by the Company pursuant to the Placing;
"Power Brands"	the Group's business is focused on eight power brands, which the Group considers to be the brands with the highest growth potential.  The eight power brands of the Group are: Ambrosia, Batchelors, Bisto, Hovis, Loyd Grossman, Mr. Kipling, Oxo and Sharwood's;
"£" or "pence"	the lawful currency of the United Kingdom;
"PRA"	the Prudential Regulation Authority of the United Kingdom;
"Prospectus"	the prospectus dated the same date as this document relating to Premier Foods for the purpose of the Placing and the Rights Issue (together with any supplements or amendments thereto);
"Prospectus Directive"	Directive 2003/71/EC of the European Parliament and of the Council of the European Union on the prospectus to be published when securities are to be offered to the public or admitted to trading, as amended (including pursuant to the PD Amending Directive);
"Prospectus Rules"	the prospectus rules made under Part VI of FSMA (as set out in the FCA Handbook), as amended;
"Provisional Allotment Letter"	the provisional allotment letter to be issued in connection with the Rights Issue;
"Qualifying CREST Shareholders"	Qualifying Shareholders holding Ordinary Shares in uncertificated form;
"Qualifying Non-CREST Shareholders"	Qualifying Shareholders holding Ordinary Shares in certificated form;
"Qualifying Shareholders"	holders of Existing Ordinary Shares on the register of members of Premier Foods at the Record Date;
"Record Date"	close of business on 20 March 2014;
"Reference Date"	28 February 2014, the last practicable date prior to publication of this document and the Prospectus;
"Related Party Resolution"	the ordinary resolution to authorise the participation of Warburg Pincus as a Placee in the Placing, being Resolution 3 proposed at the General Meeting;
"Resolutions"	the JV Resolution and Capital Refinancing Resolutions to be proposed at the General Meeting, as set out in the Notice;
"Retained Flour Business"	the business undertaken by the Group in relation to the manufacture and supply of: (i) products in the flour (including bread flour), bread mixes and other bread-making ingredients categories in pack sizes no greater than four kilograms; and (ii) products in the flour, bread mixes, bread-making ingredients and baking mixes categories for distribution to foodservice or catering customers;
"RHM Pension Scheme"	the pension scheme governed by a trust deed and rules dated 30 June 2011 and effective from 29 July 2011 (as amended from time to time);
"RHM Pension Trustee"	the trustee of the RHM Pension Scheme;
"Rights Issue"	the offer by way of rights to Qualifying Shareholders and Placees to subscribe for New Ordinary Shares, on the terms and conditions set out in the Prospectus and, in the case of Qualifying Non-CREST Shareholders, the Provisional Allotment Letter;
"Rights Issue Price"	50 pence per New Ordinary Share;
"SEC"	the United States Securities and Exchange Commission;
"Shareholder" or "Shareholders"	the holder(s) of Ordinary Shares from time to time;
"SHA"	the shareholders' agreement to be entered into between Premier Foods,  Gores and Hovis Holdings on completion of the Subscription Agreement;
"Subscription Agreement" or "SA"	the subscription agreement entered into on 27 January 2014 between Premier Foods, Hovis Holdings, Hovis Limited and Gores;
"subsidiary"	a subsidiary as that term is defined in section 1159 of the Companies Act 2006;
"subsidiary undertaking"	a subsidiary undertaking as that term is defined in section 1162 of the Companies Act 2006;
"Support Brands"	all brands of the Group other than the Power Brands including, Angel Delight, Atora, Be-Ro, Bird's, Homepride, Lyons, Marvel, McDougalls, Paxo, Saxa and Smash;
"UK Listing Authority"	the Financial Conduct Authority acting in its capacity as the competent authority for the purposes of FSMA;
"uncertificated" or "in uncertificated form"	refers to a share or other security recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST;
"Underwriters"	the Joint Bookrunners;
"Underwriting Agreement"	the conditional underwriting agreement dated on or around the date of this document between Premier Foods, the Joint Sponsors and the Underwriters in relation to the Placing and the Rights Issue, further details of which are set out in section 21.17 of Part X (Additional Information) of the Prospectus;
"United Kingdom" or "UK"	the United Kingdom of Great Britain and Northern Ireland;
"United States" or "US"	the United States of America, its territories and possessions, any state of the United States and the District of Columbia;
"US Securities Act"	the United States Securities Act of 1933, as amended;
"VAT"	value added tax; and
"Warburg Pincus"	WP X Investments I Ltd, an affiliate of Warburg Pincus LLC.

All references to time in this announcement are references to the time in London, United Kingdom.