15th Jan 2014 09:44
LONDON (Alliance News) - Pubs group Punch Taverns PLC Wednesday revealed the final terms of its debt restructuring proposals, after more than a year of talks with key stakeholders,
Punch Taverns is trying restructure its Punch A and Punch B securities in an effort to improve its balance sheet and debt-to-earnings ratio, while avoiding a default in the near future. Its debt holders requested a number of changes to the proposed terms announced on December 9, 2013.
Punch Taverns said that the modified plans include fixed or target amortisation schedules for all senior notes; modified Spens clause protection on all senior notes for any prepayments ahead of the amortisation schedules; increased Payment In Kind coupons on junior notes, and strengthened operational covenants.
Under a Spens clause, a debt issuer has to value the cash flows beyond the date of the call or redemption at the government bond yield, or some other low rate. PIK coupons are a deferred coupon, with no cash interest payments during the bond's term.
Punch said the commitment of the company's cash resources, which is necessary for the restructuring to go ahead, is conditional on the approval of all classes of Punch A and B securitisation noteholders.
Punch Taverns said that the restructuring proposals are final and that failure to put the proposals in place would lead to default in the near-term, at which point securitisation cash resources, which are being used to facilitate the restructuring, would be severely depleted, due to the mandatory prepayment of GBP188 million of available cash to Class A notes at par and the loss of the company's GBP52 million cash contribution.
The pubs operator also gave a trading update for the 20 weeks to January 4, saying that like-for-like net income in its core estate was up 1.5% and, supported by poor weather the year earlier. It said it saw growth in average net income per pub across its entire estate.
Punch Taverns said that expectations for its core estate remain unchanged, expecting it to deliver like-for-like net income growth for the current financial year of up to 1%.
It said that the pub investment and non-core pub disposal programmes remain on track, with full year capital investment expected to be around GBP45 million and disposal proceeds, raised largely from the disposal of non-core pubs, expected to be around GBP100 million.
Shares in Punch Taverns were down 1.5% Wednesday morning, trading at 16.00 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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