Category Archives: $PFD

@WhereKitWan $PFD (Premier Foods) – maybe worth looking at now following refi …FV…

FV=95 on Premier Foods and read today in the FT, Goldman set a 90p Price target and think the company has funding to take through the decade and will not require additional fund raising.

Strategy: Buy  here at 60 area,  Take Profit = 90,  Stop 45.

2CentView does not plan to initiate a position in Premier Foods.

@wherekitwan $pfd …not sure about hovis improvement but here is the math on rights issue..

$PFD premier foods is highly leveraged ie have a lot of debt. They company recently denied they were doing a rights issue but did not rule it out.
Here is some maths on what a rights issue could do:
Based on 2012 accounts, $PFD made 100mm operating income but paid out 90mm in interest costs (net debt nearly 1bn pounds). So Earnings = 10mm. If they could reduce interest costs by a third by raising 300m of equity i.e. 1:1 for rights issue as the market cap is 300m, their earnings become 100mm – 60mm = 40mm
So EPS becomes 10mm/240mm (240mm shares in issue) = 4.2p share to 40mm/480mm = 8.3p share i.e. EPS doubles even after dilution. However all this is easier said than done – investors need to be convinced that investing more equity in the company is the right thing and would want normal want a discount to the current price to participate in the rights – however, in the case of $PFD it makes sense. $TCG did something similar and it worked as the stock fell after the dilution but rose quickly again after the debt reduction and savings interests costs outweighed the dilution.

So not sure how you can improve a loaf of bread ..they have already thought of mixing brown with white and removing the edges no one eats…kidding aside would wait for the company to confirm the rights issue before the investing, otherwise it remains too highly leveraged and a small decline in earnings mean negative EPS!

In the mean time look at #mobilesocialcloud, solar power or 3d printing!