London, Nov 18 - Premier Foods, Britain's biggest food manufacturer, said on Tuesday it will not pay an interim dividend in 2008 as it looks to reduce its debt.
The maker of Hovis bread, Mr Kipling cakes, and Branston pickle, also said it had agreed with its lenders that a test of its banking covenants due on Dec 31 2008 would be delayed until March 31, 2009.
The group said it had entered into discussions with its lending banks, which are expected to continue into the first quarter of next year.
With the review ongoing, Premier said its lending banks had agreed to defer the date of the next covenant test. In return, Premier has agreed to pay a fee of 4.9 million pounds ($7.31 million) to the lending banks.
Premier's debt, which was built up as a result of the acquisitions of Campbell Soup Co's UK and Irish operations in 2006, and bakery group RHM the following year, stood at 1.8 billion pounds at the end of June.
Chairman David Kappler said the group is reviewing a range of options to accelerate the reduction of its debt "in order to establish a more appropriate long-term capital structure given the fundamental change in the credit markets".
Premier said it will consider its future dividend policy as part of its long term capital structure review but intends to resume dividend payments when debt levels permit.