London, Oct 17 - Shares in Britain's biggest food manufacturer Premier Foods fell over 50 percent on Friday as traders cited market speculation that the company had, or was about to, breach banking covenants.
A source close to the company told Reuters that Premier would have had to issue a stock exchange statement if it had breached, or expected to breach, conditions attached to its loans.
The company declined to comment. It issued a statement earlier this week saying it was looking at proposals to reduce debt levels.
"The rumours surprise me," said Martin Deboo, analyst at Investec Securities.
"There is no formal covenant test until December 31. They made their covenants at the end of the half year and my view is that they will pass that December covenant test," Deboo said.