Punch launches restructuring plans as it looks to woo sceptical shareholders
BATTLING against unsustainable debt, Staffordshire pubco Punch Taverns has finally launched its proposed restructuring plan.
The company has spent much of the summer trying to convince a group of shareholders fearful of equity dilution that the restructuring of its Punch A and Punch B securitisations is vital if it is not to default on its loans.
In a statement today, Punch said it was finally in a position to launch the long-awaited restructuring after convincing the doubters the plan was in the best interests of the company.
The board said it believed the proposals would create a more robust and sustainable debt structure for the group, with the reduction of total net debt by £0.6bn.
Punch said the proposals had the support of a broad range of stakeholders that in aggregate own or control around 65% of the notes across Punch A and B and around 54% of the equity share capital of Punch.
The stakeholders comprise the Association of British Insurers’ special committee together with a number of investment funds managed or advised by Alchemy Special Opportunities, Alchemy Special Opportunities (Guernsey), Avenue Europe International Management, Angelo, Gordon & Co., AG Funds, Bluecrest Capital Management (New York), Glenview Capital Management, Luxor Capital Group, Moore Capital Management, Oaktree Capital Management, Seer Capital Management, Serengeti Asset Management, and Warwick Capital Partners. Ambac (the monoline insurer for the Punch A securitisation) has also agreed to support the proposals, said Punch.
Implementation of the proposals is conditional upon the approval of shareholders, all classes of noteholders in Punch A and Punch B and certain other securitisation creditors. In particular, the proposals will also require the support of The Royal Bank of Scotland, which is a liquidity facility provider to the Punch A and Punch B securitisations and provider of hedging arrangements to the Punch A securitisation.
In addition, support will also be needed from Lloyds Bank, Citibank, London branch and MBIA UK Insurance.
Punch said it had held detailed discussions with these stakeholders over an extended period and would continue the process until it had secured the support it needed.
Failure to do so could see the company default on its loans.
Punch said it would be sending details to shareholders, setting out details of the proposals and the date of a general meeting on September 17 when a vote will be taken on the scheme. It is also convening meetings of each class of noteholders in Punch A and Punch B for the same day.
If the requisite approval is agreed then the proposals are expected to become effective, and dealing in the new shares is expected to begin on October 8.
Stephen Billingham, executive chairman of Punch Taverns, said: “Today we launch the Punch restructuring, reflecting agreement across multiple stakeholder groups.
“The board believes that the restructuring will create a more robust balance sheet which will provide stability for the business, provide a firm base to allow Punch to build on recent improvements in trading and lead to further deleveraging.
“The benefits of approving the restructuring are clear and of benefit to all stakeholders. It is of critical importance that shareholders and noteholders vote in favour of the resolutions in order to implement the restructuring and avoid the adverse consequences for the group of the restructuring not proceeding.”
