Capital Structure - Progress update

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Deleveraging of the Punch A securitisation: noteholders benefit from a reduction in leverage at completion;

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Reduction in cash leakage: senior noteholders benefit from a c.54% reduction in cash paid to other stakeholders (over three years) compared to a scenario in which the restructuring proposals are not implemented;

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Repayment of senior notes to a fixed amortisation schedule: senior noteholders benefit from fixed amortisation based on a 1.2x FCF DSCR and amortisation of senior variable notes from any remaining excess cash flow; and

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Junior noteholders to receive cash and new LIBOR based cash pay and PIK notes: junior noteholders will receive a mixture of cash, and new LIBOR based cash pay and or higher coupon PIK notes in a delevered securitisation structure.

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Creates a more robust and sustainable debt structure: next expected refinancing for the Punch A and Punch B securitisations is not anticipated to be until 2027 and 2020 respectively;

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Preserves the benefits of the Group structure for all stakeholders: both securitisations will continue to benefit from the material financial and operational synergies, estimated at £25 million per year, which are available to them by virtue of being part of the wider Group; and

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Materially better position than the alternative: we expect that the Punch A and Punch B securitisations gross debt to EBITDA ratio would be c.4x lower by 2018 than under a scenario in which the modified restructuring proposals are not implemented.

Enquiries:

Punch Taverns plc

Tel: 01283 501 948

Stephen Billingham, Executive Chairman

Steve Dando, Finance Director

Media: Brunswick

Tel: 020 7404 5959

Jonathan Glass, Mike Smith

Restructuring:

Goldman Sachs International

Tel: 020 7774 1000

Andrew Wilkinson, Sarah Mook

The Blackstone Group International Partners LLP

Tel: 020 7451 4000

Martin Gudgeon, David Riddell

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Creates a more robust debt structure that avoids the risk of near-term financial covenant default, with a reduction in net debt of £348 million at completion;

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Creates a more sustainable capital structure that allows the Group to focus fully on the delivery of its business plan, reduces uncertainty around the securitisation and preserves the material financial and operational synergies available to Punch A through being part of the wider Group;

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Senior noteholders benefit from a 4.8x reduction in the gross debt to EBITDA ratio at completion (from 10.7x to 5.9x, excluding swap mark-to-market and unsecured junior notes) together with a 53% reduction in cash paid to other stakeholders (over three years) compared to a scenario in which the restructuring proposals are not implemented. In addition, senior noteholders will benefit from a fixed amortisation schedule based on a 1.2x FCF DSCR;

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Improves the covenant protection for all creditors, with no ability to upstream excess cash out of the securitisation;

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Junior noteholders receive a mixture of cash and new cash pay and or higher coupon PIK notes in a delevered securitisation structure. The new junior notes are structured as LIBOR based notes, with cash pay or PIK coupons; and

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Following the restructuring, we expect that Punch A's gross debt to EBITDA ratio would be c.4x lower by 2018 than under a scenario in which the modified restructuring proposals are not implemented.

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Creates a more robust debt structure that avoids the risk of near-term financial covenant default, with a reduction in net debt of £166 million at completion;

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Creates a more sustainable capital structure that allows the Group to focus fully on the delivery of its business plan, reduces uncertainty around the securitisation and preserves the material financial and operational synergies available to Punch B through being part of the wider Group;

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Senior noteholders benefit from a 4.0x reduction in the gross debt to EBITDA ratio at completion (from 10.5x to 6.5x, excluding swap mark-to-market and unsecured junior notes) together with a 56% reduction in cash paid to other stakeholders (over three years) compared to a scenario in which the restructuring proposals are not implemented. In addition, senior noteholders will benefit from a fixed amortisation schedule based on a 1.2x FCF DSCR;

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Improves the covenant protection for all creditors, with no ability to upstream excess cash out of the securitisation;

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Junior noteholders receive a mixture of cash and new cash pay notes in a delevered securitisation structure. The new junior notes are structured as LIBOR based notes, with cash pay coupons; and

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Following the restructuring, we expect that Punch B's gross debt to EBITDA ratio would be c.4x lower by 2018 than under a scenario in which the modified restructuring proposals are not implemented.

Overview

n Class A Notes fully reinstated as fixed (70%) and variable (30%) Notes

- Amortisation on Class A fixed Notes reprofiled to target 1.2x FCF DSCR and final maturity set to minimise change in WAL

n Class M-D Notes extinguished for a mix of c.£120 million of cash at a discount and £318 million of new Class M3 and £183 million of new Class B4 Notes

n Monoline financial guarantees to be removed as a condition of the restructuring

Day 1 cash paydown

n £120 million of cash used to cancel Class M-D Notes at a discount to par

- £25 million used to cancel 26.1% of Class M1 Notes at 95.0% of par

- £19 million used to cancel 38.2% of Class B1 Notes at 62.5% of par

- £20 million used to cancel 38.2% of Class B2 Notes at 62.5% of par

- £32 million used to cancel 45.5% of Class B3 Notes at 52.5% of par

- £17 million used to cancel 100% of Class C Notes at 20.0% of par

- £7 million used to cancel 100% of Class D1 Notes at 10.0% of par

Class A Notes

n 100% of Class A1 and A2 Notes to be exchanged for a combination of Class A "Fixed" Notes which are subject to a fixed contractual amortisation schedule, and Class A "Variable" Notes with no fixed contractual amortisation but which will be prepaid in priority to other notes using excess cash from the Punch A Securitisation

- 70% of Class A Notes to be exchanged for Class A "Fixed" Notes (£189 million of "Class A1(F)" Notes and £138 million of "Class A2(F)" Notes)

- 30% of Class A Notes to be exchanged for Class A "Variable" Notes (£81 million of "Class A1(V)" Notes and £59 million of "Class A2(V)" Notes)

n Further details of the maturity and amortisation of the Class A Notes are set out in "Amortisation and maturity" below

n Potential third party cash out offer on day 1 for Class A Notes at 105% of par

New Class M3 and B4 Notes

n Remaining Class M and B Notes following day 1 cash paydown exchanged into new Class M3 and B4 Notes at the following prices:

- Class M1 Notes: 95.0% of par; 72.5% as new Class M3 Notes and 27.5% as new Class B4 Notes

- Class M2 Notes: 82.5% of par; 72.5% as new Class M3 Notes and 27.5% as new Class B4 Notes

- Class B1 and B2 Notes: 62.5% of par; 27.5% as new Class M3 Notes and 72.5% as new Class B4 Notes

- Class B3 Notes: 52.5% of par; 27.5% as new Class M3 Notes and 72.5% as new Class B4 Notes

n Total of £318 million of new Class M3 Notes to be issued as a result of the allocations described above

n Total of £183 million of new Class B4 Notes to be issued as a result of the allocations described above

Class M, B, C and D Notes cash and new Class M3 and B4 Notes allocations per £1,000 nominal value

Amortisation and maturity

n Contractual amortisation of Class A(F) Notes profiled to target a 1.2x cash DSCR, with final maturity dates for each Class of Notes set to minimise change in WAL from existing Class A Notes

- Class A1(F) Notes final maturity in 2027

- Class A2(F) Notes final maturity in 2026

n No contractual amortisation of Class A1(V) Notes and Class A2(V) Notes, although prepaid in priority to other notes using excess cash from the Punch A Securitisation:

- Class A1(V) Notes final maturity in 2027

- Class A2(V) Notes final maturity in 2026

n Contractual amortisation of Class M3 Notes profiled to target a 1.2x cash DSCR, with amortisation to commence only once Class A(F) Notes and Class A(V) Notes have been repaid in full

- Class M3 Notes final maturity in 2028

n No contractual amortisation of Class B4 Notes

- Class B4 Notes final maturity in 2029

Prepayments

n Excess cash within the Punch A securitisation (after paying or providing for costs and expenses, retention of a £15m cash reserve and payment of the service fee (if any)) to be applied as mandatory prepayment of Class A1(V) Notes and Class A2(V) Notes at par

n Following mandatory prepayment of Class A(V) Notes, excess cash within the Punch A Securitisation (after paying or providing for costs and expenses, retention of a £15m cash reserve and payment of service fee (if any)) to be retained for future senior debt service, purchase of senior bonds in the market or applied as voluntary prepayment of amortisation as per the waterfall:

- first, to prepay amortisation on Class A1(F) Notes and Class A2(F) Notes pro rata; and

- second, to prepay amortisation on Class M3 Notes

n Voluntary prepayments of Class A(F) Notes will be made at modified Spens (G+100bps)

n Class M3 and B4 Notes to have a 3 year non-call period from closing with optional redemption at par thereafter

Coupons

n Coupon on Class A1 Notes (i.e. Class A1(F) Notes and Class A1(V) Notes) to remain unchanged at 7.274%

n Coupon on Class A2 Notes (i.e. Class A1(V) Notes and Class A2(V) Notes) to increase to 7.32% (to include quantum of financial guarantee fee, as described in the section entitled "Monoline financial guarantees" below)

n Class M3 Notes carry a cash pay coupon of LIBOR + 4.50%

n Class B4 Notes carry a cash pay coupon of LIBOR, and a PIK coupon of 9.00%

Asset disposals

n Restrictions on asset disposals to be amended to allow the disposal of:

- All non-core pubs; and

- Up to 7% of core pubs per year, up to a maximum of 25% of all core pubs, to be tested by reference to EBITDA on the same basis as the current disposals test (but with existing cumulative limits to be reset from the date of the restructuring)

Capex

n Minimum capex required equivalent to £8,000 per core pub per annum, increasing annually in-line with CPI

Financial covenants

n Financial covenants tested quarterly on a rolling 4Q basis

- FCF DSCR covenant set at 1.0x

- EBITDA ICR covenant set at 1.25x on day 1, stepping up to 1.70x in Q4-2022

- Net senior leverage covenant with 15% headroom to business plan

- Net Worth financial covenant

Outside payments

n No distributions or service fee where Class A net leverage (excluding hedge MtM) is above 4.0x

n 2% of EBITDA per annum to be paid as a service fee to the Group service company once Class A net leverage is below 4.0x (excluding hedge MtM)

Monoline financial guarantees

n Financial guarantee on Class A2, M2 and B3 Notes to be released as a condition of the Punch A restructuring, in consideration for an uplift in the coupon on those notes in an amount equal to

- 0.50% for Class A2 Notes (from 6.82% to 7.32%)

- 1.20% for Class M2 Notes and 1.44% for Class B3 Notes to be allocated to the new Class M3 Notes with the cash coupon sized accordingly to reflect the benefit of the financial guarantee fees which would otherwise have been payable on the Class M2 Notes and the Class B3 Notes

Hedgecontracts

n Hedges on cancelled Class M2, B3 and D1 Notes reallocated to the new Class M3 and B4 Notes

- No change to the notional profile and pricing terms of the existing contracts

n To prevent over hedging as a result of the prepayment of contractual amortisation, hedging arrangements will be partially terminated

n Entry into new hedges permitted, to the extent of any under hedging

Liquidity facility

n Liquidity facility commitment sized to cover 18 months peak contractual debt service at transaction close:

- Liquidity facility sized to cover Class A Notes 18 months peak principal and interest

- Sub-limit of liquidity facility for Class M3 Notes sized to cover 18 months peak interest only

- Sub-limit of liquidity facility for Class B4 Notes sized to cover 18 months peak cash pay interest only

n Repricing of the liquidity facility fee to maintain payments as under the current liquidity facility agreement

n Rating triggers to be modified to permit return of standby drawings to one of the liquidity facility providers of £147 million

Security and subordination

n Class A Notes benefit from full security and covenant package

n New Class M3 Notes subordinated to Class A Notes and benefit from full security and covenant package

n New Class B4 Notes subordinated to Class A and Class M3 Notes and have no security or covenant protection (save as referred to below)

n New Class B4 Notes have a share pledge over Punch A equity that can be enforced upon breach of the 1.0x FCF DSCR covenant

- Class A Notes in Punch A will be repaid in full upon enforcement of share pledge

Weighted average life (WAL) extension of Notes

Current WAL

n Class A1: 5.1 yrs

n Class A2: 3.6 yrs

n Class M3: NA

n Class B4: N/A

New legal WAL

n Class A1(F): 8.9 yrs

n Class A1(V): 4.5 yrs

n Class A2(F): 5.9 yrs

n Class A2(V): 3.3 yrs

n Class M3: 14.7 yrs

n Class B4: 15.6 yrs

Overview

n c.£55 million Punch B cash used to pay down Class A8 Notes at par and pay break costs associated with the Class A8 hedge

n Class A3, A6 and A7 Notes fully reinstated

- Amortisation on Class A Notes reprofiled to target 1.2x FCF DSCR and final maturity set to minimise change in WAL

n Class B1, B2 and C1 Notes extinguished for a mix of c.£52 million of PGE cash at a discount and £112 million of new Class B3 Notes

n Financial guarantee on Class A7 Notes to be removed as a condition of the restructuring

Day 1 cash paydown

n £55 million of Punch B cash used to pay down £45 million outstanding Class A8 Notes at par and pay break costs of c.£10 million associated with the Class A8 hedge

n £52 million of PGE cash used to cancel junior notes at a discount to par

- £16 million used to cancel 31.0% of Class B1 Notes at 84.0% of par

- £25 million used to cancel 31.0% of Class B2 Notes at 83.0% of par

- £11 million used to cancel 35.0% of Class C1 Notes at 26.0% of par

Class A Notes

n 100% of Class A3, A6 and A7 Notes reinstated

n Further details of the maturity and amortisation of the Class A Notes are set out in "Amortisation and maturity" below

New Class B3 Notes

n £112m new Class B3 Notes to be issued

n Remaining Class B and C Noteholders following day 1 cash paydown exchanged into new Class B3 Notes at the following prices:

- Class B1 Notes: 84.0% of par as new Class B3 Notes

- Class B2 Notes: 83.0% of par as new Class B3 Notes

- Class C1 Notes: 26.0% of par as new Class B3 Notes

Class B and C Notes cash and new Class B3 Notes allocations per £1,000 nominal value

Amortisation and maturity

n Contractual amortisation of Class A3, A6 and A7 Notes reprofiled to target a 1.2x cash DSCR, with final maturity dates for each class of Notes set to minimise change in WAL

- Class A3 Notes final maturity in 2020

- Class A6 Notes final maturity in 2022

- Class A7 Notes final maturity in 2025

n Bullet repayment of new Class B3 Notes in 2029

Prepayments

n Excess cash within the Punch B Securitisation (after paying or providing for costs and expenses, retention of a £10m cash reserve and payment of service fee (if any)) to be retained for future senior debt service, purchase of senior bonds in the market or used as voluntary prepayment of amortisation as per the waterfall:

- first, to prepay amortisation on Class A3 Notes, Class A6 Notes and Class A7 Notes; and

- second, to prepay amortisation on Class B3 Notes

- Voluntary prepayment of Class A Notes will be paid at modified spens (G+100bps)

Coupons

n Coupon on Class A3 Notes unchanged at 7.369%

n Coupon on Class A6 Notes unchanged at 5.943%

n Coupon on Class A7 Notes increased to 5.267% (to include quantum of current financial guarantee fee, as described in the section entitled "Monoline financial guarantees" below)

n Coupon on Class B3 Notes to equal LIBOR + 4.50%

Asset disposals

n Restrictions on asset disposals to be amended to allow the disposal of:

- All non-core pubs; and

- Up to 7% of core pubs per year, up to a maximum of 25% of all core pubs, to be tested by reference to EBITDA on the same basis as the current disposals test (but with existing cumulative limits to be reset from the date of the restructuring)

Capex

n Minimum capex required equivalent to £8,000 per core pub per annum, increasing annually in-line with CPI

Financial covenants

n Financial covenants tested quarterly on a rolling 4Q basis

- FCF DSCR covenant set at 1.0x

- EBITDA ICR covenant set at 1.25x on day 1, stepping up to 1.70x in Q4-2022

- Net senior leverage covenant with 15% headroom to business plan

- Net Worth financial covenant

Outside payments

n No distributions or service fee payments where Class A net leverage (excluding hedge MtM) is above 4.0x

n 2% of EBITDA per annum to be paid as a service fee to the Group service company once Class A net leverage is below 4.0x (excluding hedge MtM)

Monoline financial guarantees

n Financial guarantee on Class A7 to be released as a condition of the Punch B restructuring in consideration for an uplift in the coupon on the remaining Class A7 Notes in an amount equal to 0.50%

n Class A8 notes paid down on day 1

Hedgecontracts

n Class A8 hedge

- MtM of c.£10 million of Class A8 hedge to be crystallised and paid down on day 1

n Class C1 hedge:

- Existing C1 hedge to be reallocated to new Class B3 Notes

- Current hedge notional of £125 million to be reduced to £112 million to eliminate over hedge

- Remainder of hedge will remain in place with no change to the notional profile and pricing terms of the existing contracts

- MtM of c.£3 million on cancelled portion of Class C1 hedge to be crystallised, to be left outstanding as a super senior loan due to the swap provider and repaid over 7 years with no coupon

n To prevent over hedging as a result of the prepayment of contractual amortisation, hedging arrangements will be partially terminated

n Entry into new hedges permitted, to the extent of any under hedging

Liquidity facility

n Liquidity facility to remain in place

n Liquidity facility commitment sized to cover 18 months peak contractual debt service at transaction close

- Liquidity facility sized to cover Class A Notes 18 months peak principal and interest

- Sub-limit of liquidity facility for Class B3 Notes sized to cover 18 months peak interest only

n Repricing of the liquidity facility fee to maintain payments under the current liquidity facility agreement

n Rating triggers to be modified to permit the return of standby drawings to the liquidity facility provider of £168 million

Security and covenants

n Reinstated Class A Notes to benefit from full security and covenants

n New Class B3 Notes

- No security or covenants

- Fully subordinated to the reinstated Class A Notes

Weighted average life (WAL) extension of Notes

Current WAL

n Class A3: 4.8 yrs

n Class A6: 7.6 yrs

n Class A7: 8.3 yrs

n Class A8: 11.1 yrs

n Class B3: N/A

New legal WAL

n Class A3: 4.7 yrs

n Class A6: 7.5 yrs

n Class A7: 8.2 yrs

n Class A8: N/A

n Class B3: 15.8 yrs