UPDATE: Asda Working On Plans In Case More Suppliers Fail

Asda Group Ltd., the U.K.'s second-biggest retailer by sales, said Monday it is working on contingency plans in case more of its suppliers go into administration following the collapse of Woolworths Group PLC (WLW.LN) and fears about Premier Foods PLC's (PFD.LN) future.

"We're now going through our business and planning contingencies so that if and when another supplier goes into administration we can secure supplies elsewhere," an Asda spokeswoman said.

"It's in our interests to keep suppliers healthy though. We'd rather not have to look elsewhere - but it may be inevitable in some cases," she added.

Asda is a wholly owned subsidiary of Wal-Mart Stores Inc. (WMT) of the U.S.

Woolworths' 800 stores and its Entertainment UK Ltd. wholesale distribution business were placed into administration Nov. 27. EUK distributed CDs and DVDs to supermarkets and other retailers.

Earlier Monday, Premier Foods, which makes a number of branded food products, such as Hovis bread and Branston pickle, said it is in talks with investors and other parties about a cash injection to help cut its near GBP2 billion debt ahead of bank covenant tests in March.

Premier Foods said it has held preliminary discussions with "a number of its investors and certain other parties" regarding a possible investment. No decision regarding the size or structure of the investment has been made.

Brokerage firm Collins Stewart said it is in no one's interest for Premier Foods to fail, "especially the major grocery chains, who have increasing concerns about smaller suppliers and could do without the major headache that disruption to the supply of core brands would entail."

Supermarket chains J Sainsbury PLC (SBRY.LN) and William Morrison Supermarkets PLC (MRW.LN) declined to comment on Premier Foods' woes. Tesco PLC (TSCO.LN) wasn't available to comment.

-By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290; [e-mail]

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