Shareholders back plans for Punch demerger

SHAREHOLDERS in Punch Taverns have voted in favour of plans for the demerger of the company’s managed pub business, known as Spirit.

The proposals, backed at a general meeting yesterday, mean the demerger will become effective on Monday August 1 and dealings in the shares of Spirit Pub Company plc will begin at 8am on that day.

Burton upon Trent based Punch announced in March its intention to split the managed estate from its tenanted pubs business, creating two separately listed companies. The tenanted estate will retain the Punch name.

The managed side, branded Spirit, includes chains such as Fayre & Square and Chef & Brewer. It will comprise around 1,350 pubs, a mixture of the former managed pubs and Punch’s best performing leased pubs.

It is thought a number of the leased pubs will switch over the next few years to become managed operations.

The split could also see hundreds of poorly performing pubs sold off to raise cash for debt repayment.

The demerger will see Walker Boyd become chairman of Spirit, with Ian Dyson taking on the role of chief executive. Mike Tye will be deputy chief executive and Russell Margerrison will serve as interim finance director.

Spirit intends to adopt a progressive dividend policy with a payout ratio of 33% of net income over the medium term.

Punch said it was positioning itself to drive long term value by downsizing to an estate of around 3,000 high quality pubs, with the aim of becoming “one of the UK’s highest quality and most trusted leased operators”.

As of July 1 Punch comprised 5,080 pubs, of which 2,954 pubs are in the core division and 2,126 are in the non-core division.

On the Punch side, the demerger will see Stephen Billingham become company chairman with Roger Whiteside as chief executive and Steve Dando as finance director.

Mr Dyson said: “We are pleased to announce the formal intention to demerge Spirit. This will create the foundation for both Spirit and Punch to execute their plans to deliver long term sustainable value for all of our stakeholders and builds on the significant progress that both businesses have made over the last year.”