Premier Foods FD sees debt falling in second half

LONDON (Reuters) - Premier Foods' (PFD.L) Finance Director Paul Thomas expects the group's net debt to fall in the second half but declined to say what level the group is targeting.

Premier's debt had risen to 1.82 billion pounds by the end of June compared with 1.61 billion at the end of December 2007.

Thomas said the rise is a result of the seasonality of the business, which generates most of its profits in the second half, and the costs of a restructuring programme.

"In the second half, because of the seasonality of the business and because the restructuring programme has come to an end, we'd expect to see that fall. What I'm not going to do is talk about expected levels but it will fall," Thomas told reporters on a conference call.

Citigroup analysts now expect the group's year end debt level to be nearer 1.7 billion pounds than their previous forecast of 1.6 billion.

Shares in Premier have fallen over 70 percent in the last year as the credit crunch raised concerns over the group's level of debt after the acquisitions of RHM and parts of Campbell's in 2007.

That has led to speculation the group could be forced into launching a rights issue to shore up its balance sheet -- something Premier has always denied.

Premier said on Tuesday it met its financial covenant tests at the end of June and expects to continue to operate within them.

Its shares were down 0.7 percent at 75-3/4 pence at 8:30 a.m. (Reporting by Matthew Scuffham, Editing by Mark Potter)