Premier Foods, the Hovis, Mr Kipling and Branston pickle maker, this morning confirmed that Warburg Pincus, the private equity group, is becoming a significant shareholder.

The news came as Premier, whose other brands include Bisto gravy and Hartley’s jam, announced that it was tapping shareholders for £404 million in an attemptd to reduce its £1.4 billion debt mountain.

Investors are being invited to buy five new shares at 26p each — a discount of nine per cent to Wednesday’s closing price of 28.5p — for every four they presently own.

Warburg Pincus will end up with a minimum of 10 per cent of the company as part of its investment but, due to a clawback scheme, could end up with as much as 20 per cent depending on demand for shares from Premier’s existing investors.

Robert Schofield, the chief executive of Premier Foods, said: “We have to say, at this moment of time, we think that will be unlikely.”

Mr Schofield said that the involvement of Warburg Pincus — which is entitled to a seat on the board as part of its investment — should not be taken as a sign that Premier’s management had been worried at getting insufficient support from its existing shareholders.

He added: “We have had great support from our shareholders. We always wanted to favour our existing shareholders first. It’s not a case of being confident but being sure.”

Mr Schofield said that Premier had initially hoped to reduce its debts — a legacy of its £1.2 billion takeover of RHM, the Hovis maker, two years ago — through sales of some of its brands.

He went on: “We did look at disposing assets a year ago and tried to make a substantial sale at one point. There was a lot of interest in it, but when the financial markets froze up, that option was not open to us because there was no credible finance behind any potential buyers.”

He said that, following the fund-raising, Premier was no longer under any pressure to dispose of brands.

But he added: “We don’t need to make any sales but we will review what’s in our portfolio anyway. We never rule out disposals but, with prices and the current market at their current level, it’s not very likely.”

Mr Schofield insisted that no executives at Premier, whose shares have lost 90 per cent of their value during the past two years, would be resigning despite the situation in which the company finds itself.

He added: “Why would we want to do that? Basically, we’ve acquired RHM, we’ve created the largest food company in the land, we have traded strongly and we are generating the synergies we promised. The scale arising from that, and our strong brands, have helped us significantly to recover our cost increases in pricing.

“I don’t think we’re alone — there have been six rights issues in the last four or five days. We’re a product of the changing economic environment.”

He was speaking as Premier, whose other brands include Quorn and Loyd Grossman sauces, reported a 13.5 per cent rise in full year pre-tax profits to £193.8million.

Mr Schofield said that 2008 had been a “year of two halves” — with the first half dominated by having to raise prices to claw back soaring ingredient and energy costs and with progress “impeded” by a rationalisation of Premier’s factories.

In the second half, Premier had enjoyed solid growth, with brands like Quorn doing especially well. He said Hovis was trading particularly strongly following its relaunch in September — since when it has increased its market share by 2.4 percentage points.

But he warned that there had been some downturn in demand for premium products during the economic downturn — particularly in chilled products which Premier makes for one of its outside customers. Mr Schofield refused to name the customer involved but it is understood to be Marks & Spencer.

Mr Schofield warned that, despite the slowdown in raw material costs, the weakness of sterling against the euro and the US dollar meant that further price increases were likely this year.

He added: “We’ve still got inflation. At its height, it was 17 per cent. It’s come down from that, but it’s still there. We’ve still got some commodity prices rising — cocoa, honey and beans are all rising but, on top of that, is the currency.

“We buy 22 per cent of our materials — and we spend £1.3 billion in total — in dollars and euros and so lower inflation has clearly has been offset in some cases by currency weaknesses.”

He said that current trading was in line with the firm’s expectations and was “pretty similar to what we experienced in the run-up to Christmas”.

Paul Thomas, the finance director, said that it was impossible to say when the company might resume paying dividends: “Our focus for the moment is paying down debt.”

The shares were up 6p at 34.5p during the first half-hour of trading.

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