18th Sep 2014 07:03
LONDON (Alliance News) - Punch Taverns PLC has almost ended a drawn-out process to restructure its GBP2.3 billion debt pile Thursday, after bondholders and shareholders finally agreed to its latest proposals.
The debt-for-equity deal will mean shareholders are left with 15% of the equity while bondholders take over the remainder of the stock. However, debt will be cut by GBP600.0 million.
The company ran up a debt pile of several billion pounds through an expansion spree, but was then hit hard when the financial crisis and ensuing economic downturn weighed on its trading and it was hit by structural changes like a ban on smoking in pubs and a general fall in the number of drinkers going to pubs and bars.
Talks over the debt restructuring have been dragging on, with different classes of Punch creditors disagreeing on various proposals to restructure the debt because any proposal will bring disadvantages to one class or another. However, the company and the creditors needed a deal as Punch risked breaching covenants on the debt and defaulting.
Punch still needs the restructuring to be approved by The Royal Bank of Scotland Group PLC and Lloyds Banking Group PLC, which are providing liquidity to its current Punch A and Punch B securitisations. As long as it gets those approvals, it expects the restructuring to take place on October 8.
By Steve McGrath; [email protected]; @stevemcgrath1
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