Punch looks to KO opponents to vital restructuring plan

THE chairman of Staffordshire pubco Punch Taverns has said the next few days will be some of the most important in the company’s history as it battles to persuade shareholders to accept a new restructuring plan.

The company said late last month that it was willing to continue talks with creditors to try and get the scheme approved and has striven to do so.

The move came after senior lenders to the company rejected the restructuring plan put forward by the Punch board.

Punch had said earlier in the month that it was implementing its complicated Punch A and Punch B debt restructuring strategy to prevent the business from having to default in the near term.

The company said it was launching the capital restructuring of its A and B securitisations following a 14-month review of the business structure and discussions with stakeholders.

Punch said the purpose of the discussions had been to reach an agreement on the terms of a consensual restructuring for both securitisations.

It warned failure to implement a consensual restructuring was likely to lead to a default in the relevant securitisation in the near-term.

However, the group of lenders, represented by a special committee of the Association of British Insurers, said they could not agree with the Punch strategy and have threatened to vote against it at a special meeting this month unless the pubco revises its plans and opens further talks.

Speaking ahead of the vital meeting on February 14, Punch executive chairman Stephen Billingham today said: “The next few days will be some of the most important in the company’s history. The Punch board calls on all parties to vote in favour of the restructuring proposals.”
 
Continuing the rallying cry, he added: “It is well known that certain creditors with blocking stakes have said they do not support the proposals.  There are also other creditors with conflicting views who have blocking stakes.  We have tried to listen to everyone and find a middle way.  While it is not possible to accommodate all of the conflicting views, Punch has attempted over a 14 month period of engagement and at significant financial cost and management time to find a balance between these conflicting views.”  
 
He said the company had tried to be as constructive as possible and the restructuring proposals incorporated a “significant number” of stakeholder requests.

“Although they would result in debt to EBITDA of c. nine times and an interest expense of c.9% per annum, which is at the upper limit for a pub securitisation, the board believes that they would provide a stable capital structure,” said Billingham.
 
“The board believes that the restructuring proposals deliver more value for all noteholders than default.  Everyone has something to gain by voting for the proposals.”
 
He reiterated his warning from last month that failure to agree the restructuring would lead to a default and this was likely to have “a material negative impact on the business”.  

“Punch has a very good underlying business with a positive future and its assets provide a focal point for 4,000 communities across the UK.  Just as Punch’s operational performance is turning the corner, the last thing the business needs is for continued uncertainty,” he added.

“The restructuring would provide certainty and stability for the business from which all stakeholders will benefit.  In the next few days stakeholders have it in their hands to vote in favour of the restructuring proposals to end this uncertainty.”