PREMIER FOODS faces an inquiry by Britain’s main financial regulator over its delay in informing the stock market of the contamination problem.
The company’s board was informed of the presence of the illegal dye in its Worcester Sauce on Monday but no action was taken to update the stock market until the market closed yesterday afternoon.
The rules of the Stock Exchange require every company to inform the market of information likely to affect their assets or liabilities, and, in turn, their share price, as soon as possible.
The Financial Services Authority (FSA) would not comment on the Premier case but confirmed that companies were obliged to divulge any price-sensitive information “without delay”.
Advertisement
Paul Thomas, the finance director of the food group, denied that the company had neglected its responsibility to keep the stock market informed. He told The Times that discussions had taken place with the FSA all week, but that the company did not know if any products would be recalled until yesterday. “We are conscious of our responsibilities as a plc. The decision to go public by the Food Standards Agency took place only on Friday.”
Mr Thomas, who joined the company in 2002, said that most of the day had been spent co-ordinating the product recall with retailers and the agency, rather than addressing the financial liability. However, he said that Premier had insurance to cover the cost of the product recall although ultimately he believed that the final liability for the withdrawal would rest with its UK supplier.
Premier, which has been trading on the stock exchange since last July, said its annual sales of Worcester Sauce were worth £1 million. However, because the ingredient is added to so many soups, sauces and ready meals, the potential value of the products affected is much higher.
Premier Foods, which has a stock market value of £686 million, said in a statement that it received the ingredient from a “reputable UK source”, itself supplied by another British company.
Mr Thomas said Premier had received a written assurance that its chilli powder did not contain Sudan I, after the 2002 ruling preventing the use of the colourant was brought in by the FSA. “After the new rules came in we sent this batch back to the supplier to be certified. We have certificates to say it is not contaminated,” he said.
Advertisement
Premier’s stock of raw material is free from contamination and there will be limited interruption to supply, its statement added. Shares in the company slipped 2.7 per cent to close down at 280p. However, the shares remain at a premium to the flotation price in July of 215p.
Stephen Alexander, a partner at Class Law Solicitors, said that Premier was likely to escape litigation from unhappy customers. “A consumer has to show that they have suffered damage and that any cancer they have has been caused by Premier’s product. I think that would be very hard to prove,” he said.
“It’s bad PR for the company and it is going to cost them but I can’t see that they will be hit with a claim.”
The company has had a bumpy ride since it made its stock market debut in July.
The maker of Typhoo Tea and Branston Pickle was hit by a factory fire at its Bury St Edmunds factory last October which threatened supplies. Manufacture of Branston, as well as Haywards Pickles, Loyd Grossman sauces and the Waistline range were all affected in the critical pre-Christmas period. Other favourites that Premier makes include Cadbury’s drinking chocolate, Typhoo Tea, Gales honey, Chivers and Hartley’s jams.