4th Nov 2013 12:27
LONDON (Alliance News) - Punch Taverns PLC Monday urged its debt lenders to reach a deal or risk disruption to its business, after some senior creditors demanded a bigger allocation of available cash resources as part of the company's attempt to reorganize its capital structure.
The pub operator in June had put forward proposals for restructuring its complicated securities structure in an effort to cut its debt servicing and interest costs. Under the reforms, the debt-laden company was proposing that its senior noteholders would be repaid faster than junior holders, while junior holders would get less of the repayment in cash. Senior holders would also get an option to get cash rather than their planned debt repayments.
In debt deals, senior debt holders get priority over junior holders.
Monday, the company said certain senior holders have requested a greater proportion of available cash resources is allocated to the senior lenders, with junior holders getting a mixture of cash, shares and reinstated PIK notes.
"These proposals from certain senior creditors are inconsistent with the request from certain junior creditors that value is allocated to the junior notes in recognition of their ability to benefit from the ongoing cashflows and liquidity facilities within the securitisation structures, not withstanding default, and are inconsistent with the position of shareholders who are unwilling to contemplate dilution," the company said in a statement.
Punch said it was working to resolve the differences between its senior and junior debt lenders, and hopes to announce a revised restructuring proposal in the first week of December taking account of the broadest level of support at that time.
"Failure to achieve a consensual restructuring of both securitisations would, in the board's opinion, give rise to the risk of material dissynergies across the two securitisations and the wider Punch group and disruption to the business," Punch said
"As a result, it is in the interests of all parties to agree a consensual restructuring to avoid such dissynergies and disruption and to put in place a sustainable long-term capital structure for the securitisations," it added.
Punch said it has been trading in line with management expectations in the last eight weeks. It will give more details November 27 when it puts out its first-quarter interim management statement.
Punch shares were down 5.8% at 12.25 pence midday Monday.
By Steve McGrath; [email protected]; @SteveMcGrath1
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