Creditors urge Punch Taverns to reopen talks on debt restructure

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Punch Taverns’ creditors urged the pub company to reopen negotiations over a restructuring of its debt, saying they would not support an earlier proposal to avoid a default.

The company announced it was embarking on a debt reduction plan earlier this month, after being hit hard by Britain’s economic downturn, and is trying to reduce £2.3bn of debt.

Punch’s debt structure is complex, with debt split into two securitised vehicles, Punch A and Punch B.

Bondholders rejected the proposal put forward early last year stating it was too generous to shareholders and junior creditors.

The pub firm then put forward on January 15 a revised proposal of a debt extension and a reduction in the amount that will be repaid to creditors.

But sources close to the bondholders said the creditors had found issues with the commercial terms, the structure of the new notes and the documentation.

Creditors ABI Senior Noteholder Committee, Angelo Gordon, Oaktree Capital Management and Warwick Capital Partners said yesterday they were unable to support the revised proposals, and would vote against them at any meetings of the issuer companies.

“The creditors believe Punch should reopen negotiations ... (and) remain willing to work in good faith to agree a consensual restructuring for both Punch A and Punch B,” they said in a statement.

“(We) continue to believe this to be in the best interests of all stakeholders,” they added.

The creditors said they had various blocking stakes in a number of classes of Punch A and B notes.

Punch said it had acknowledged the statement from its creditors and would be available for discussions on the restructuring proposals. Bondholders will vote on the restructuring on February 14.

Shares in Punch were down 1.0 per cent at 15.00p.

Earlier this month Punch said its programme of pub disposals was likely to take longer than expected due to improved trading at its non-core estate, with average profit per pub down by five per cent on a year ago.

The division’s 1,106 pubs bring in 18 per cent of sales. Punch has over 4,200 pubs in its portfolio and its pubs are divided into three categories based on their location, target market and proximity to customers.

The pub categories are community pubs, which form the backbone of its estate; high street pubs, which provide breakfast, coffee, lunch and a town centre bar, for local workers and residents, and destination pubs, which are usually out of town.