18th Aug 2014 09:05
LONDON (Alliance News) - Punch Taverns PLC Monday unveiled the terms of its debt restructuring proposals.
In a statement, Punch Taverns said it is recommending that shareholders and noteholders vote in favour of the proposals at meetings scheduled for September. The pub operator said that it has the support of stakeholders that in aggregate own or control about 65% of the notes across the Punch A and Punch B securitisations, as well as about 54% of its equity share capital.
Punch Taverns said the restructuring will reduce net debt, including the mark-to-market on interest rate swaps, by GBP600.0 million. It said the proposals are "broadly similar" to those announced on June 26, before the restructuring of its Punch A and Punch B securitisations was delayed on August 11.
According to Punch, failure to obtain approval for the proposals from shareholders, noteholders and these other securitisation creditors is expected to lead to near-term default in the Punch A and Punch B securitisations. However, the debt-for-equity swap and firm placing contemplated by the proposals would result in significant equity dilution for existing shareholders. According to Punch, this would mean that its currently issued share capital would represent 15% of its total enlarged issued share capital following implementation.
"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," Executive Chairman Stephen Billingham said in a statement.
"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," Billingham added.
Punch Taverns shares were Monday quoted at 9.20 pence, untraded.
By Samuel Agini; [email protected]; @samuelagini
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