Punch Taverns fires gun on debt swap talk
PUNCH Taverns is said to have started talks with its lenders over a debt-for-equity swap that would give the pub group a much-needed lifeline.
Britain’s biggest pub operator is bearing a £2.3bn debt mountain, amassed from a string of acquisitions over the past few years.
Under the proposed plans, Punch Taverns’ lenders would forgive the company’s debt in return for a majority stake. The pub group is said to have hired Goldman Sachs and Blackstone to advise on the negotiations. Punch Taverns split from its managed pubs arm, Spirit Group, last year but was left with most of the debt.
It suffers a complex debt structure formed from two vehicles, one backed by the income from about 3,000 pubs and the other from the company’s remaining 2,000 outlets – which have nine and seven tranches of publicly traded bonds respectively.
Punch Taverns is currently in the middle of a restructure that will see it offload almost half its pubs, leaving it with “a core estate” of 2,946. It aims to hit 500 disposals this year, and has already sold more than 2,000 pubs since 2008.
The pub group’s shares closed at 8p on Friday – a fraction of its 276p per share high in May 2007 – valuing Punch Taverns at £53m.
Punch declined to comment.