Spirit starts trading after Punch split

DEBT laden pub company Punch Taverns completed its demerger yesterday as its Spirit business started trading on the market.

Shares in the slimmed-down Punch plummeted 80 per cent to 13p, as Spirit Pub Company ended the day broadly flat at 52p.

Spirit consists of the better performing managed pub business while the leasehold section continues to trade under the Punch Taverns name.

The move has been made to give Spirit the chance to thrive by not being saddled with the debt and operational difficulties afflicting Punch.

However, some analysts have predicted that the Punch Taverns business will be at risk of breaching covenants.

Citigroup said in a note: “We continue to see covenant breaches as a key risk and think that the new group will need to support these vehicles with £40m-£45m pa of PLC cash to prevent this occurrence.”

Former Punch chief executive Ian Dyson is now boss at Spirit, while Punch Taverns is headed by Roger Whiteside.

Under the demerger Spirit will operate 800 pubs while Punch will look to offload 2,200 premises as it addresses its £2.3bn debt pile.