Premier Foods has sold a 10% stake to private equity group Warburg Pincus after today confirming its rights issue.

The £404m placement, exclusively revealed in The Grocer last week, will raise £379m after fees, which Premier will use to help reduce its £1.8bn debt, and sees Warburg take an initial 10.3% stake that could eventually rise to  20%.

The manufacturing giant, owner of brands including Hovis, Mr  Kipling and Sharwood’s, also said it had renegotiated terms with its lending  banks.

“We believe the share issue, the amended lending agreement  and new pensions framework agreement announced today will… provide a solid  platform for Premier Foods' future development,” said chief executive Robert Schofield.

Total sales for the year to 31 December 2008 soared  22.5% to £2.6bn following the acquisitions of RHM and Campbell’s but Premier still racked up a net loss of £373.3m after one-off costs and charges.

But the relaunched Hovis brand grew its market share by 2.4 percentage points to 24.7% and Schofield professed himself happy with trading.

“One of the most pleasing aspects of the  business in 2008 is how robust trading has been during a tough period for  consumer-facing businesses,” said Schofield.

“We believe that  with the momentum developed in our grocery business over the last four months  of 2008, combined with the successful relaunch of Hovis and the remaining  integration synergies, we are well positioned for further progress in  2009.”