Shares in Premier Foods, the UK’s largest food supplier, tumbled 30% yesterday to 35p among fears about the company¹s high debt levels.

The company was the second-heaviest faller on the FTSE 350 index on a day the markets as a whole dropped by 5.4%.

The news comes after Premier earlier in the week admitted it was speaking to private equity investors in a bid to repackage some of the £1.7bn debt racked up by the group during its acquisitions of RHM and Campbell’s.

Credit Suisse this week downgraded its target price for Premier to 130p – still more than triple its last closing price – but maintained its positive rating on the company. It also suggested Premier might cut its dividend or sell off some of its companies to improve its cash situation.

Share in Premier, which is thought to be close to exceeding its banking covenants, are down by more than three-quarters (84%) from a 12-month high of 225.5p.