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Punch chairman’s last ditch plea to lenders 5 February 2014

The possible failure to pass a debt restructuring plan will lead to at least five years of “mess” and “uncertainty”, Punch Taverns will warn lenders.

For just over a year Punch Taverns, which operates 4,000 pubs in the UK, has been negotiating the restructure of its £2.3bn debt with its lenders.

In January, the pub group proposed another debt restructuring plan which would reduce the debt to £1.8bn and avoid a default, which was subsequently rejected by the company’s lenders.

Several groups of bondholders with blocking votes have already rejected the plan before the vote – which will occur on 14 February – and insist that talks continue.

Speaking to The Telegraph, Stephen Billingham, executive chairman of Punch, urged creditors back to the deal, believing that negotiations would carry on for years in the deal is blocked.

Billingham said: “It just ends up with a mess. I have real concerns that nobody has an alternative out there that is realistic or sensible.”

In the event the plan receives a “no” vote next week, one or both of the structures – Punch A and Punch B – will most likely be placed in administrative receivership.

As the company would remain solvent and the pub landlords would continue to pay their leases, this would only serve to prolong the discussions and state of uncertainty over the group.

Billingham said: “The same people we have been negotiating with up to now are the same people sitting there in the [debt restructure. The whole debate is among the same people in administration as to what happens.

“An administrative receivership of this company could last 4-5 years, it could last longer. We can’t see, post a default, a very simple way these structures would get sorted out.”

A source close to the opposing bondholders said: “The deal on the table fails on three counts, the commercial terms are unacceptable to multiple groups of lenders, the structure of the new notes is flaws, and the documentation in unsignable.”



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