LONDON (ShareCast) - (Sharecast News) - Premier Foods has proposed a £1.4bn capital reduction to give it more flexibility to pay dividends and manage its capital.
The maker of Mr Kipling cakes and Angel Delight said it had a profit and loss account deficit of £460.3m and a positive balance of £1.41bn in its share premium account.

The share premium account is an undistributable reserve, limiting its uses severely. Premier proposed cancelling the credit and transferring it to the profit and loss account to eliminate the profit and loss deficit and increase distributable reserves.

"The board believes that the proposed capital reduction will provide greater flexibility in how the company manages its capital resources, such as the ability to pay dividends, should the board determine it is appropriate to do so," Premier said. "However, the company has not made any decision as to the use of any such realised profits, should the proposed capital reduction take place."

The company will put the proposal to shareholders at a general meeting on 11 January. It said the move reflected its strengthened financial position including lower debt and an agreement with its pension schemes.

Premier's shares rose 3% to 96.02p at 11:46 GMT. the company's shares have more than doubled from 38p at the start of 2020.

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