Premier Foods offloads a canning arm to slash debt

Canned-food brands Crosse & Blackwell and Fray Bentos changed hands for £182 million today as Premier Foods sold its East Anglian canning business to Princes.

The business also includes the Farrow's marrowfat peas and Smedley's brands as well as producing own-label canned soups, fruit and vegetables for the supermarkets.

This is the second big sell-off in a month. Premier grew rapidly by acquisition but has been forced to concentrate on improving its balance sheet more recently.

In January it sold its Quorn and Cauldron non-meat business for £205 million.

Today's deal will cut Premier's debt below £1 billion from its peak of £1.7 billion of 2008.

That means, according to finance director Jim Smart, that "the large part of our perceived problem has been solved".

Next week's results are likely to show annual earnings of around £300 million and, if there is the usual good second-half cashflow, debt could be considerably below £1 billion.

Smart said that while canned fruit and veg sales were generally declining at 1% a year as people switched to fresh foods, sales of own-brand had dropped some 10% last year as the big brands fought a fierce price war.

That meant the supermarkets' own brands had little price advantage over the well-known labels.