Punch Taverns announces financial restructure to cut debt and boost investment
STAFFORDSHIRE pubco Punch Taverns has agreed a set of restructuring proposals which it hopes will save the business millions of pounds and release cash for investment.
The Burton-upon-Trent based business announced in October last year that it had completed a detailed review of the group’s capital structure and that discussions were taking place with certain stakeholders on a range of options to restructure the group’s capital structure.
In a statement today, the firm said that while these discussions remained ongoing, sufficient progress had been made to enable the board to identify a series of restructuring measures.
Stephen Billingham, Executive Chairman of Punch Taverns, said: “Following extensive stakeholder discussions, we are now able to set out the key terms of restructuring proposals that we believe will deliver value to all stakeholders and can be successfully implemented. Importantly, these proposals already have the support of a significant group of stakeholders.”
The proposals include plans to utilise cash resources at the group and within the Punch B securitisation to cancel debt and defer amortisation in the Punch A securitisation to create a platform for future deleveraging.
This will result in a £463m debt reduction over the next five years, together with £393m of targeted debt prepayment ahead of a new amortisation schedule over the same timescale.
There will be an immediate £229m reduction in debt in the Punch B securitisation.
The firm said this would deliver significant value to all stakeholders including the creation of a sustainable capital structure for a highly profitable pub business. This operation delivered £225m of underlying operating profit and £312m of cash generation before debt service in the last financial year.
The proposals will also provide a platform on which to execute the business plan, including a £220m investment programme focused on the core estate and the disposal of £435m of non-core assets.
It also protects the material financial and operational benefits from which the two securitisations mutually benefit by being part of the wider Punch group.
The plans are supported a broad group of stakeholders including a group of five financial institutions, consisting of Glenview Capital, Octavian, Luxor Capital, Alchemy and Avenue Capital, which together manage funds holding more than 50% of the group’s issued share capital, around 25% of the Punch B debt and a majority of the total junior debt in Punch B and the trustees of the Punch B defined benefit pension scheme.
Monoline insurers, Ambac and MBIA, which between them guarantee around £990m of notes across the two securitisations, including over 50% of the Punch A notes, are also in favour.
The board has also begun talks with a number of other stakeholders including swap counterparties, liquidity facility providers and other debt holders.
