12th Feb 2014 10:59
LONDON (Alliance News) - Punch Taverns PLC Wednesday said it has withdrawn resolutions that were supposed to be put to a meeting of its noteholders on Friday so that it can continue talks about its debt restructuring with stakeholders.
The talks have been dragging on, with 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 need a deal as Punch risks breaching covenants on the debt and defaulting.
"As previously announced, both securitisations will default without a consensual restructuring. The board remains of the view that a consensual restructuring is in the best interests of all stakeholders and can be agreed ahead of the next covenant reporting date of 15 April 2014," the company said in a statement.
In December, the pub operator had unveiled new capital structure proposals after talks with key investors, although it also noted that while there was a broad level of support for the proposals there are still a number of areas on which consensus has to be reached.
The pubs group is trying to restructure its capital, its Punch A and Punch B securities, in an effort to improve its balance sheet and its debt to earnings ratio and attempt to avoid a default in the near future.
The modified plans included deleveraging of the Punch A securities at completion; senior noteholders benefiting from a reduction of about 54% in cash paid to other stakeholders over three years; repayment of senior notes to a fixed amortisation schedule; and junior noteholders receiving a mixture of cash, and new LIBOR based cash pay and or higher coupon PIK notes in a delevered securitisation structure.
Punch said that if the proposals were accepted, its Punch A securities wouldn't need to be refinanced again until 2027 and its Punch B securities until 2020.
Punch Taverns shares were down 8% at 11.483 pence Wednesday morning.
By Steve McGrath; [email protected]; @SteveMcGrath1
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