Premier Foods Share Discussion Threads

[qs99] 23/6/2020 09:52

nice moves ahead of results

[shanklin] 18/6/2020 14:28

..and we'll get a slice of that. Ouch.

[shaker44] 18/6/2020 12:03

Thought they were expecting a lump for hovis

[shanklin] 18/6/2020 11:22

Given the cash flow and the actions being taken on the pension funds, why would PFD raise cash at this point? There's a lot of mileage yet for the share price IMHO... ...and PFD would need to have a use for the cash

[18bt] 18/6/2020 10:48

And if it did, say, raise £50-75m, would the share price rise? It would need the support of Nissin etc.

[ynot68] 18/6/2020 08:12

Any possibility PFD might tap shareholders?

[qs99] 11/6/2020 11:54

Amazing graph....nice to see above the 80p TP....50% upside still therefore potential on Peel Hunt target from here....DYOR....wish I had stocked up at 20p!!

[qs99] 11/6/2020 10:55

Always nice to see blue in a falling market! DYOR

[shanklin] 11/6/2020 07:01

Piece on PFD at the foot of this article

[shaker44] 11/6/2020 06:37

Peel hunt reviewed pfd today in context of likely Hovis sale and set target price of 80p. Should at least get mm's to up the ante- or widen spread at least!!

[arshadte] 10/6/2020 10:57

The way it's going today we could get 80p this year.

[daz1712] 10/6/2020 10:25

The borrowing is certainly under control and a lot better now than some blue chip companies, credit rating has improved(as shown on their website) so a 75mill windfall could be the icing on the cake, together with the pension sorted and the lockdown increasing revenues, maybe a divided next year would boost the price further
80-100 would be nice but maybe a while off?

[shanklin] 10/6/2020 09:16

I don't normally invest in companies with weak balance sheets but PFD do seem to be moving in the right direction pretty damn quickly.

[aldgatee1] 10/6/2020 09:11

Yes, sounds about right. Risks, hopefully, on the upside. The 8x could edge up a bit over time if they can continue to milk cash. Dividend at 1/3 of EPS would be useful, too. Would give it a 6% yield at 52p. Other upside risk = poss bid. Never say never. Look at Hovis!

[18bt] 10/6/2020 08:46

aldgate agree with that; there's a good chance the capital structure will be about right in 12-18 months. The focus will then move to the strategic, but a normal rating should have emerged. For me that means c8x 10p earnings - low multiple because the brands are still old fashioned. So my target is 80-100p by end 2021.

[aldgatee1] 10/6/2020 07:47

Good stuff. Can't see any negatives re this particular deal. They're steadily moving value within EV from debt and pension to equity. It worked well at, say Enterprise Inns. Value of the business needn't change. If they can work on the debt and the PF 'deficit' then more of the worth will fall through to shareholders!

[18bt] 10/6/2020 06:42

Re the pensions: all the pensions in Hovis seem to be DC schemes, so that does not seem to be a complicating factor for a sale.

[18bt] 10/6/2020 06:36

Last accounts of Hovis Holdings at Companies House are for 31/12/2018 showed EBITDA of £14.6m on turnover of £336m for the baking business. However, it did generate c£23.8m of cash of which £21m was used to repay borrowings. Borrowing secured on the baking business were about £14m at year end . The milling businesses are largely sold. Shareholder loans were £50m - these are PIK loan notes with a 10% coupon - presumably this is now reduced by £7.6m x2 for each shareholder. Overall there were +ve Net Assets (includiong £36m goodwill) of £42m. If baking can keep producing cash, then there could be scope to repay further loan notes this year.

So very little to go on, but reports of £200m may not be wildly inaccurate. Another £75-100m to reduce the debt in PFD would make a massive difference to the borrowings (because there is no contribution from Hovis in Group EBITDA) and interest rate. It would allow a substantial further repayment of the expensive floating note (5% over LIBOR). So lets conservatively say that would be worth £3.8m a year in saved interest in the very least. But the further balance sheet de-risking is more important - combined with further operating cashflow and the recent partial repayment, it probably allows all the July 2022 floating notes to be redeemed. That leaves £300m of 6.25% fixed notes due October 2023 and a still expensive RCF.

A sale combined with the pension scheme merger should have them back up at a proper market rating for a food company IMHO.

[aldgatee1] 09/6/2020 19:57

re valuation, my understanding is it's in the books at zero. Good point on the pension. Sky says could be an auction. Maybe no action till Autumn. Company could / should come out and say something tomorrow, really. One of those '...there can be no guarantee of a transaction but...' type comments. I don't know what if any debt is in Hovis. If there is any, it might have to come off the rumoured £100m price tag.

[18bt] 09/6/2020 18:54

From the 2019 Accounts:

The Group’s only associate is Hovis, the investment for which was previously impaired.

Note 4: Finance income includes reversal of the impairment of the Hovis loan note, driven by the receipt of £7.6m from Hovis.

Note 7 then clarifies that the reversal is only partial: Relates to partial reversal of the impairment of the Hovis loan note, driven by the receipt of £7.6m from Hovis. So I need to look back and see how the transaction was structured. That was on 27/1/2014 and the details are in the March 2014 circular which accompanied the rights issue to be found here: www.premierfoods.co.uk/CorporateSite/media/documents/investors/shareholder/agm information/Circular-(1).pdf

But it seems that Hovis is in the books for a fat £0. However, need to confirm that tomorrow when I have got through the relevant bits of the circular, but it appears that the Loan Note originally had a value of £15.7m.

I need to research whether Hovis employees are in the RHM Pension schemes that they are looking to consolidate, but the RHM scheme is in surplus, so this shouldn't be a blocker to a sale.

[aldgatee1] 09/6/2020 17:22

Sky has it selling Hovis for £100m - hxxps://news.sky.com/story/hovis-owners-eye-chance-to-make-dough-with-100m-sale-12003510
Premier share 49%. Co not commenting

[arshadte] 05/6/2020 21:14

Where did you get the broker views from ?

[discodave4] 05/6/2020 18:58

Took my eye of this one, got side tracked elsewhere.It's doing exceedingly well, lol.

[qs99] 05/6/2020 13:01

tipped somewhere?

[3rd eye] 04/6/2020 13:45

PFD Premier Foods..........

going for a 3 year high !!!!!!!!!!!!!!



Latest broker views

Date Broker Recomm. Current Price Price when issued Old price New price
26 May 20 Shore Capital Buy 46.80 45.20 - -
26 May 20 Peel Hunt Buy 46.80 45.20 80.00 -
06 May 20 Peel Hunt Buy 46.80 45.40 80.00 -
20 Apr 20 Jefferies International Buy 46.80 32.70 41.00 63.00