Premier Foods cuts dividend and rejigs debt

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The firm, Britain's biggest food producer, has seen its shares slump 50 percent over the last eight weeks on worries it might breach borrowing terms and as spiralling ingredient costs and intense competition from rivals and supermarkets hit margins.

With analysts relieved the firm would not overstep its borrow terms, the firm's shares jumped 11 percent to 101.5 pence in early trading on Tuesday.

Analysts had expected Premier Foods would pay a 13 pence a share total dividend but the maker of Branston pickle, Oxo stock cubes and Angel Delight cut its 6.5p to save money.

Analysts have also speculated that the firm may sell off some of it units to help scale back its growing debt burden, but Chief Executive Robert Schofield told Reuters the firm had no current plans for a break up although he did not rule it out in future.

"We have got no plans to sell off parts of the business."

"We always look at the whole portfolio and see what is strategic to us and what is not. We also ask ourselves the question whether we can maximise any part of the business or if some other business might do it better," he said in a telephone interview.

The firm's bread division has been hit hardest by the sharp recent rise in wheat costs. Despite the costs spiralling Premier have been unable to pass on the rises to customers as rivals have kept prices down.

Schofield said that the tables could now turn however, with others being hit hard by a sudden jump in the price of Canadian wheat, which they use far more of than Premier does.

(Editing by Quentin Bryar)