Premier Foods £25m bill to spur cash call

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The fees paid by the maker of Hovis bread and Bisto gravy to secure the extra capital - 6% of the amount raised - makes it one of the most expensive fundraising exercises yet, a sign of the extra risk banks think they are taking.

The offer at 26p a share, a 9% discount to the 28.5p share price yesterday, is underwritten by Citi and RBS Hoare Govett.

Goldman Sachs and Rothschild will also share a chunk of the fees.

Private-equity house Warburg Pincus is taking a stake in the company that could be as large as 20%, depending on how popular the right issue is with other investors. Its gets a seat on the board in return.

Chief executive Robert Schofield said the deal will "put in place an appropriate capital structure" and leave the company on a "solid platform".

Premier has debt of £1.8 billion. Some of this will be paid off using the proceeds from the rights issue.