Punch Taverns launches long-awaited £2.3bn debt deal

 
Oliver Smith
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BRITAIN’S second largest pub group yesterday launched a £2.3bn debt re­structuring proposal, largely unchanged from the one announced in June and aims to reduce Punch’s debt by £600m, now with the support of 65 per cent of its lenders.

Af­ter nearly 650 days of negot­iations with lenders over how Punch could best secure the future of its 4,000 pubs while meeting its debt obligations, the firm finally looks set to solve the impasse after manage­ment agreed to discuss a debt- for- equity swap with creditors in June.

“We’re heading in the right direction and momentum is on our side,” executive chairman Stephen Billingham told City A.M. yesterday.

Under the deal Punch’s lenders will take around 85 per cent of its market value in exchange for reducing its total debt by £600m.

The deal leaves existing shareholders holding just 15 per cent of Punch’s stock. Punch also said shareholders holding 54 per cent of its shares back the restructuring.

The indebted publican now needs to raise the plan’s level of support to at least 75 per cent of votes cast at noteholder and shareholder meetings on 17 September.

Punch still has to secure the backing of lenders Royal Bank of Scotland, Lloyds and Citibank. “We need to continue getting supporters on side. So over the next month we’re going to continue to lobby people and we’re obviously going to talk to share­holders to make sure we get 75 per cent of them on board as well,” said Billingham.

If approved the restructuring will become effective from 8 October, if not Punch could default on 14 October.

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