The relaunch of Hovis has helped Premier Foods to a 9% hike in sales for the four months to 25 October, as the manufacturing giant continues to wrestle with its £1.7bn debt burden.

Sales of Hovis were up by 11% against the equivalent period last year, helping overall sales to rise by 9%. The company also said its Chilled & Ireland division was benefiting from improved volumes.

“We have seen both good sales volume and value growth over the last two months in our Grocery division and that momentum has continued into November,” said chief executive Robert Schofield. “Our broad portfolio of category leading brands and retailer branded products is demonstrating a natural resilience in the current economic conditions.”

Premier also revealed it is in discussions with creditors to establish what chairman David Kappler called a “more appropriate long-term capital structure”.

The company will not be paying interim dividends to shareholders in 2008 and has agreed to pay £4.9m to lenders to extend banking covenants from the end of 2008 to 31 March 2009, buying the company breathing space as it seeks to address the debt.

 The news comes after Premier this weekend turned down a £250m bid from rival group United Biscuits for leading cake brand Mr Kipling.

Earlier this month it emerged that Premier had called in accountancy giant Deloitte to draw up a plan to address the debt.

Kappler said: “As previously announced, Premier is reviewing a range of options to accelerate the reduction of group debt in order to establish a more appropriate long-term capital structure given the fundamental change in the credit markets. As part of this review, the company has entered into discussions with its lending banks, which are expected to continue into the first quarter of 2009.”