Premier Foods is set to sell off a 40% stake in the company to private equity investors as the owner of Hovis and Branston Pickle seeks to reduce its £1.6bn debt burden.

The company is also planning to launch a rights issue as part of a bid to raise around £300m, which will be used to reduce the company’s debt.

Major private equity groups linked with a move for the stake include Blackstone, FoodVest owner Lion Capital and Birds Eye parent Permira, according to The Times.

Additionally, Premier hopes its creditors – which include Lloyds TSB and Royal Bank of Scotland – will agree to relax the terms of its loans in return for a major payment towards the debt.

Last year Premier was linked with the sale of a number of its major brands, with cake range Mr Kipling the subject of an approach from United Biscuits, while Heinz enquired after sauces brand Sharwood’s as recently as December.