* Canned foods business sold to Prince for 182 mln pounds
* Sale represents multiple of 5.75 times earnings
* Deal cuts average debt/EBITDA ratio by about 0.2 times
* CFO says not looking to sell Hovis
(Adds further details, comments by CFO, analyst; shares)
By James Davey
LONDON, Feb 8 (Reuters) - Premier Foods, Britain's largest food producer, has cut its debt with the 182 million pounds ($293 million) sale of of its canned foods business and said smaller disposals could follow.
Premier Foods said on Tuesday it has agreed to sell its canned business, which includes the Fray Bentos corned beef and Crosse & Blackwell brands, to Princes, the British food and drinks company owned by Mitsubishi.
The deal, which represents a multiple of 5.75 times earnings before interest, tax, depreciation and amortisation (EBITDA), comes less than a month after the firm sold its Quorn and Cauldron meat-free brands to private equity for 205 million pounds.
"If there are other people who are interested in buying bits of our business clearly we will look at it responsibly but we've done the two big ticket items that we were looking at," Chief Financial Officer Jim Smart told reporters.
He said the firm would now focus on core brands, such as Mr Kipling cakes, Hovis bread, Loyd Grossman sauces, Bisto gravy and Hartley's jam.
Further disposals would likely focus on "improving our portfolio around the margins," he said.
Smart dismissed as "nonsense" a recent press report that the firm had appointed advisers to look at selling Hovis.
"The issue with Hovis is who are you going to sell it to ?," he said, noting competition issues would likely preclude the UK's other two largest bread producers, Associated British Foods and Warburtons from bidding, while Hovis's big pension fund would likely put off new entrants to the bread market.
Shares in Premier Foods, which have increased by over 20 percent over the last three months, were flat at 22.8 pence at 1110 GMT, valuing the business at 528 million pounds.
"While we expect this transaction to give rise to material EPS dilution it should give the group a balance sheet with which the equity market is comfortable, resulting in a re-rating of the shares," said RBS analyst Julian Hardwick.
As at end-June 2010 Premier Foods had net debt of 1.37 billion pounds and its average debt/EBITDA ratio stood at 4.54 times.
It said the effect of the canned foods sale would be to reduce its average debt/EBITDA ratio by around 0.2 times, making a further contribution towards reaching the target leverage ratio of below 3.25 times.
"We're more than half way to meeting our financial target and given the size and stability of my revenues I can easily service my balance sheet and pay down the debt so I don't have a financial problem any more," added Smart. (Editing by Mark Potter, Greg Mahlich)