Capital Structure Update - Clarification

PUNCH TAVERNS PLC

("Punch" or "the Group")

Capital Structure Update - Clarification

Further to the announcement issued today at 7am, Punch would like to provide further clarification with regard to the proposed amendments to the Punch B Securitisation.

In Section 8 of the announcement, the text has been amended to the following:

- The consideration for extinguishing the class B1 notes will comprise a cash offer and a new class B3 note. The cash offer will be for 75% of the current holding at a price of 65% with the consideration for the remaining 25% of the current holding being a new class B3 note issued at par value. Therefore a holder of B1 notes with a par value of £100 would receive £48.75 in cash and new class B3 notes with a par value of £25.

- The consideration for extinguishing the class B2 notes will comprise a cash offer and a new class B3 note. The cash offer will be for 75% of the current holding at a price of 63% with the consideration for the remaining 25% of the current holding being a new class B3 note issued at par value. Therefore a holder of B2 notes with a par value of £100 would receive £47.25 in cash and new class B3 notes with a par value of £25.

- The consideration for extinguishing the class C1 notes will comprise a cash offer and a new class B3 note. The cash offer will be for 50% of the current holding at a price of 26% with the consideration for the remaining 50% of the current holding being a new class B3 note issued at 26% of par value. Therefore a holder of C1 notes with a par value of £100 would receive £13 in cash and new class B3 notes with a par value of £13.

The statement which follows has been amended to reflect this clarification.

Capital Structure Update

In October 2012, the Board of Punch (the "Board") announced that it had completed a detailed review of the Group's capital structure and that discussions were ongoing with certain stakeholders on a range of options to restructure the Group's capital structure.

While these discussions remain ongoing, sufficient progress has now been made to enable the Board to identify a restructuring solution for each securitisation that it believes is in the interests of all stakeholders and is capable of being successfully implemented.

HIGHLIGHTS

Restructuring solutions identified for each securitisation

n Utilise cash resources at Group and within the Punch B securitisation to extinguish and cancel certain tranches of Punch B debt at a material discount to par; and

n Amend financial covenants and defer amortisation in the Punch A securitisation, creating a platform for future deleveraging.

Achieves a material reduction in debt and debt service

n £463 million reduction in contractual debt service payments over the next five years;

n £393 million targeted debt prepayment ahead of the new amortisation schedule over the next five years; and

n £229 million immediate reduction in debt in the Punch B securitisation.

Delivers value to all stakeholders including:

n Creates a sustainable capital structure for a highly profitable pub business which delivered £225 million of underlying operating profit and £312 million of cash generation before debt service in the last financial year;

n Provides a platform on which to execute the business plan, including a £220 million investment programme focused on the core estate and the disposal of £435 million of non-core assets; and

n Protects the material financial and operational benefits from which the two securitisations mutually benefit by being part of the wider Punch group.

Supported by a broad group of stakeholders

n A group of five financial institutions, consisting of Glenview Capital, Octavian, Luxor Capital, Alchemy and Avenue Capital, who together manage funds that hold over 50% of the Group's issued share capital, c.25% of the Punch B debt in total and a majority of the total junior debt in Punch B and the trustees of the Punch B defined benefit pension scheme;

n Monoline insurers, Ambac and MBIA who between them guarantee c.£990 million of notes across the two securitisations, including over 50% of the Punch A notes, and whose approval of the proposed restructurings is required;

n In addition, the Board has already commenced discussions with a number of other stakeholders including swap counterparties, liquidity facility providers and other holders of debt in the two securitisations; and

n Punch will now engage with all stakeholders to seek additional support to implement the proposed restructuring solutions as soon as possible, while keeping the provision of financial support to the Punch A and Punch B securitisations under review.

Stephen Billingham, Executive Chairman of Punch Taverns plc, commented

"Following extensive stakeholder discussions, we are now able to set out the key terms of restructuring proposals that we believe will deliver value to all stakeholders and can be successfully implemented. Importantly, these proposals already have the support of a significant group of stakeholders. The Board is mindful that support is also required from a large number of other stakeholders and the Board is keen to engage with all stakeholders and commence implementation of the restructuring proposals without delay."

7 February 2013

A presentation will be available on the Punch website www.punchtaverns.com from 9.00 GMT. An audio cast and slide presentation will also be available on demand.

Enquiries

Goldman Sachs International, which is authorised and regulated in the United Kingdom by the FSA, is acting as financial adviser to Punch and for no one else in connection with the capital structure review and will not be responsible to anyone other than Punch for providing the protections afforded to clients of Goldman Sachs International nor for providing advice in relation to the capital structure review, the content of this announcement or any matter referred to herein.

The Blackstone Group International Partners LLP, which is authorised and regulated in the United Kingdom by the FSA, is acting as financial adviser to Punch and for no one else in connection with the capital structure review and will not be responsible to anyone other than Punch for providing the protections afforded to clients of The Blackstone Group International Partners LLP nor for providing advice in relation to the capital structure review, the content of this announcement or any matter referred to herein.

Disclaimer

This announcement is not intended to and does not constitute or form part of any offer to sell or invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the restructuring proposals set out herein or otherwise, nor shall it (or the fact of its distribution) form the basis of, or be relied on in connection with, any contract therefor or be considered a recommendation that any investor should subscribe for or purchase or invest in any securities.

The debt securities referred to herein (including those proposed to be issued pursuant to the restructuring proposals set out herein) have not been and will not be registered under the United States Securities Act of 1933 or any United States state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the United States Securities Act of 1933 and applicable state laws.

This announcement contains certain statements about the future outlook for the Punch group. Although we believe our expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different. As a result, you should not rely on any of these forward-looking statements. Any forward-looking statements included in this announcement are made only as of the date of this announcement, and except as otherwise required by law, we undertake no obligation to publicly update or revise any such forward-looking statements to reflect subsequent events or circumstances.

CAPITAL STRUCTURE UPDATE

1. Introduction

The objective of the capital structure review was to identify all options that could deliver a consensual restructuring of the Group's two securitisation structures in a way that delivers:

n A sustainable capital structure enabling the execution of the Group's business plan; and

n Value to all stakeholders.

2. Background to the proposed restructuring solutions

When undertaking its review of the Group's capital structure and assessing the alternative restructuring options for the Punch A and Punch B securitisation structures, the Board took a number of important factors into account, in particular the recent financial performance of the Group, its business strategy and operating outlook, the impact of financial and contractual linkages across the Group and the potential implications of a default in one or both of the securitisations. All of these factors have been critical in the Board's determination of the proposed restructuring solution for each securitisation and the proposed timetable for implementing them.

As part of the review process, the Board considered a number of alternatives to achieve such a restructuring solution and engaged in discussions with certain of its major shareholders and other significant stakeholders to seek their input on the range of options under consideration. In addition, following the completion of a process to identify the debt holders in both the Punch A and Punch B securitisations, the Board has also initiated discussions with a broad group of debt holders in both securitisations. While these discussions remain ongoing, sufficient progress has now been made to enable the Board to identify a restructuring solution for each securitisation that it believes is in the interests of all stakeholders and is capable of being successfully implemented.

The proposed restructuring solutions have the support of a number of significant stakeholders, including major shareholders representing over 50% of the Group's issued share capital, monoline insurers who guarantee c.£990 million of debt across the two securitisations (including over 50% of the Punch A notes) and whose approval of the proposed restructuring solutions is required, debt holders who own c.25% of the Punch B debt in total and a majority of the total junior debt in the Punch B securitisation and the trustees of the Punch B defined benefit pension scheme. While the Board believes that this broad level of support provides a strong basis for further engagement with stakeholders, successful implementation of the proposed restructuring solution will also require the consent of a number of other stakeholders who the Board is aware have a range of views on the proposed restructuring solutions. As a result, the Board is in discussions with a number of those other stakeholders including swap counterparties, liquidity facility providers and other holders of debt in the two securitisations and will seek to engage with all stakeholders as it endeavours to reach agreement to implement the proposed restructuring solutions.

3. Business strategy and outlook

Market positioning

Punch is a leading operator of leased and tenanted pubs in the United Kingdom. As at 8 December 2012, the Punch estate comprised 4,437 pubs located across the UK, 97% of which were held on a freehold or long leasehold basis. In addition, Punch owns 50% of Matthew Clark (Holdings) Limited, the holding company of the Matthew Clark business, a leading drinks wholesaler and distributor.

Punch's long term aim is to become the UK's highest quality, most trusted and best value leased pub company. As part of this aim, the estate was reorganised in 2011 into two separate divisions, a core division which consisted, as at 8 December 2012, of 2,921 pubs and a non-core division of 1,516 pubs. The core estate represents a higher quality, geographically well-located portfolio which is well positioned to adapt to changing market conditions and support sustainable long-term growth for Punch and our Partners.

The plan for the core division is to build on the platform created by the Pathway to Partnership programme to drive sustainable growth. The core division will aim to attract the right Partners through new lease offers, expansion of the Punch Buying Club, further development of the skills of its Partnership Development Managers, and investment to drive sales, including food.

The plan for the non-core division is to maximise short term returns with a clear focus on costs and cash flow. It is expected that these pubs will be disposed over a five year period and that disposals will be phased to ensure a balance between speed of disposal and value achieved. The majority of these pubs are on substantive agreements and will therefore continue to have access to the same operational support infrastructure as our core pubs to drive operational performance until the decision is made to dispose of them.

In the 52 weeks ended 18 August 2012, Punch generated EBITDA of £238 million (excluding non-underlying items) and £312 million of cash flow before debt service payments. The core division accounted for 79% of Punch outlet EBITDA with an average net income per pub of £75,000.

Progress on delivering our key strategic initiatives

Management actions have been focused on delivering our four key objectives:

i) Invest to improve the customer environment and increase food sales: Only 23% of our core pubs have had meaningful investment of above £40,000 in the last five years. We plan to invest in around two-thirds of the core estate over the next five years, targeting investment of £40 million per annum across 400 schemes per year. Investments are partly structured to drive increased food sales which represent a significant opportunity to our Partners and we have a five year target to increase the food sales mix from an estimated 22% in 2011 to 35% of Partner revenue.

We are on track in delivering our investment targets having invested in over 400 core pubs in 2012 with an average spend per pub of £90,000 while at the same time having increased the estimated food sales mix in our pubs by 2% to 24%.

ii) Attracting high quality Partners: The percentage of core pubs on substantive agreements is strong at 94% and we are seeing healthy levels of interest from new applicants, supported by the recent launch of our new recruitment website. Focusing on a higher quality core estate is attracting a growing number of multiple operators and we are targeting to maintain the percentage of pubs on substantive agreements at between 93% and 95% of the core estate.

iii) Driving sales growth: We continue to build on the success of the Punch Buying Club with 53% of our drinks orders now placed online, up from 25% in December 2011. The Punch Buying Club, which now has 2,400 core Partners, up from 1,100 in December 2011, gives access to exclusive deals, and through the Punch Buying Club Blog Partners can provide feedback on issues, seek advice, share best practice and access exclusive marketing point of sale materials. Through the Punch Buying Club we are committed to simplifying the administrative burden for our Partners and to drive down the cost to our Partners of running a pub.

iv) Effective Punch support: We are currently rolling out nationally our new Punch Franchise Tenancy agreement for our community local pubs aimed at new entrants to the sector. This fully supported open book agreement allows new licensees to benefit from Punch's expertise, with Punch providing greater influence over the customer offer. We have also recently increased the size of specialist field teams in the areas of investment, marketing and food development. The roll-out of free WiFi across our pub estate has also been well received with over 1,800 Partners in the core division having now signed up for this offer. At the same time as increasing our specialist field team support, we have made further head office efficiencies, as we continue to focus on cost reduction as the size of the non-core division reduces.

Financial year 2013 profit performance remains in line with management expectations

Since the trading update on 14 December 2012, market conditions have remained challenging. Despite these challenges, average profit per pub is broadly stable and overall profit performance is in line with management expectations. The Group currently expects to generate underlying EBITDA of between £210 million and £220 million in the current financial year after incurring c.£30 million of central and unallocated costs. Approximately 80% of pub EBITDA is expected to be generated from the core estate, with the remaining 20% being generated from the non-core estate.

Whilst the average quality of the estate is expected to continue to improve as the Group sells non-core assets, the core estate net income is expected to decline in the current financial year by between 3% and 4% as rents are rebalanced. Management currently expects that the core estate will return to a growth of between 0% and 1% in the next financial year as volume declines are offset by improving margins and rental income, driven in part by the impact of the capital expenditure programme which upgrades approximately 15% of the estate each year. The core estate is expected to deliver like-for-like growth in net income of between 1% and 2% in the 2015 financial year before returning to a long-term growth rate of c.2% in the 2016 financial year.

The financial performance of the non-core estate is driven to a large extent by the rate of pub failures and disposals. Overall, the disposal programme remains on track and, since commencing the programme in 2011, proceeds of £242 million have been realised from 924 pub disposals, slightly ahead of book value. The Group expects to sell between 370 and 400 non-core pubs in the current financial year, having, as at 8 December 2012, disposed of 86 pubs in the current financial year (including 11 pubs from the core estate) for proceeds of £26 million. As at 8 December 2012 there were 429 non-core pubs on the market for disposal with a book value of £111 million, leaving a further 1,087 non-core pubs with a book value of £324 million to be sold over the remaining five years of the programme.

Total overhead and pub running costs are expected to increase broadly in line with inflation on an underlying basis, with a slightly reducing absolute cost base as we continue to focus on cost reduction as the size of the non-core estate reduces.

These expectations for both the core and non-core estates by Punch management over the short to medium-term, which apply equally to both securitisation estates, have been independently reviewed and sensitised as part of the capital structure review. They also assume that any changes to current regulatory framework would not have a material impact on the Group's business. On 8 January 2013, the Department for Business, Innovation and Skills (BIS) announced plans to establish a new statutory code of practice and an independent adjudicator for the leased and tenanted pub sector. Whilst it is proposed that the new code will be based on the existing Industry Framework Code, BIS has suggested that it should reflect the principle that a tied licensee should be no worse off than a free-of-tie-licensee. Punch supports the existing Industry Framework Code and will participate in the formal consultation process which will be launched in the spring. Any legislation arising from this process would follow in due course.

In the context of the long-term trends impacting the pub industry of declining drinking-out and growing eating-out, the Board believes that, given the Group's well stated strategy, its high quality and well located estate, and the significant progress achieved in recent years, the Group is well positioned to outperform the broader market drinks volume decline, grow food revenues and, as a result, take advantage of the opportunities available to deliver growth.

4. Current capital structure

The Group is financed through two whole business securitisations, the Punch A securitisation (£1,477 million of gross debt) and the Punch B securitisation (£914 million of gross debt), as well as certain cash resources held across the Group. As at the August 2012 financial year end, the Group held £264 million of cash resources (of which £90 million was held outside the securitisation structures).

Although the securitisations have generated underlying profits and positive net cash flow (before debt service) in the last financial year, and are expected to do so in the current financial year, they continue to require financial support through the use of cash resources held outside of the securitisations to maintain compliance with their DSCR (Debt Service Cover Ratio) covenants. Without this support, both the Punch A and Punch B securitisations would breach their respective DSCR covenant levels.

The Group has provided financial support to the securitisations in the current financial year to allow the completion of the capital structure review, identification of a restructuring solution for each securitisation and discussions with stakeholders in relation to the proposed restructuring. Net support from cash resources held outside of the securitisations is estimated to be approximately £10 million for the financial half year to 2 March 2013. The net cost of continuing financial support in the second half of the financial year, should this take place would be expected to be twice the level of the cost incurred in the first half.

The provision of future financial support to the Punch A and Punch B securitisations will continue to be reviewed on an ongoing basis. Failure to effect a restructuring solution for either securitisation in the near-term may result in the Group ceasing to provide financial support to one or both of the securitisations, which in turn would result in a covenant default in the relevant securitisation. In particular, because of the financial linkages between the Punch B securitisation and the Group discussed below and the need for the Group, as part of the proposed restructuring solutions, to commit a substantial majority of its cash resources to delevering the Punch B securitisation, the scope for the Group to continue to provide ongoing financial support to the Punch A securitisation in future may be constrained.

5. Contractual linkages

Contractual linkages across the Group cover a number of areas, including financial linkages between members of the Group and companies in the securitisations, and operational linkages that allow both the Punch A and Punch B securitisation structures to take advantage of the material financial and operational benefits associated with being part of the wider Punch group.

Financial linkages

Financial linkages across the Group include those arising from pension liabilities, real estate liabilities (including guarantees of leasehold liabilities), Group tax assets and liabilities, third party indemnities (including to the monoline insurers of certain classes of the securitisations' external debt) and intercompany loans. A number of these linkages arise between companies in the securitisations and those outside them. Crystallisation of these linkages would give rise to unsecured claims against the Group and its cash resources.

A covenant default by the Punch B securitisation would be expected to crystallise some of these linkages, including pension liabilities which in certain circumstances would have a priority claim on the Group's cash resources. When combined with existing Group level liabilities, including external leasehold liabilities, the crystallisation of such linkages following a Punch B default may generate aggregate liabilities at Group level which could exceed the cash resources available to the Group to discharge those liabilities.

By contrast, a covenant default by the Punch A securitisation would not be expected to result in the crystallisation of any material linkages, meaning that the Group should remain able to use its cash resources to support a restructuring of the Punch B securitisation in such circumstances.

As a result of the potential impact of a default by the Punch B securitisation on the wider Group, it is unlikely that the Group would be able to use its cash resources held outside the securitisations to make distributions to shareholders prior to a restructuring of the Punch B securitisation.

Operational linkages

Currently, management services and supply arrangements are controlled at Group level and provided to the securitisations on a unified basis.

The operating synergies associated with providing management services and supply arrangements at Group level have been estimated by Punch as being between £15 million and £35 million per annum, which estimates have been independently reviewed. While separate management services and supply arrangements could be put in place for each securitisation, this would result in some or all of these synergies being lost across Punch A and Punch B, the impact of which is anticipated would be experienced by each securitisation broadly in proportion with the number of pubs held by that securitisation.

Where such a separation occurred as a result of a covenant default, which resulted in the Group losing operational and financial control of one of the securitisations, additional costs would be likely to be incurred, which may be material.

6. Potential default of one of the securitisations

Given that financial support is currently required to avoid the Punch A and Punch B securitisations breaching their DSCR covenants, a detailed assessment of potential default scenarios and their implications for the securitisations was undertaken as part of assessing the various available restructuring options. While the potential implications of a default cannot be predicted with certainty, any default is likely to have a material adverse impact on the value of the relevant underlying businesses and may have a material adverse impact on the value of and/or expected recoveries under the terms of the relevant bonds when compared with recently available market prices and price quotations. The magnitude of these implications would depend on the specific circumstances of the relevant default and the classes of bonds in question. In reaching this view, a number of factors were considered, including:

n The underlying contractual structures of the securitisations. These structures are complicated and there is scope for disputes between various stakeholder classes following default, including in relation to the complex intercreditor and conflict of interest provisions in the underlying transaction documentation;

n Although the documentation provides for the securitisations to continue to operate following a default of the borrower, with liquidity facilities in each case to provide additional financial flexibility, the underlying businesses may not be operated or sold in accordance with the existing business plan in the event of a default;

n It is difficult to predict how other parties including tenants, employees, suppliers and potential acquirers of pubs would react following a default, particularly if an administrative receiver were to be appointed to one or both securitisations, however there is a strong possibility of major disturbance to the finances and operations of the business; and

n There is a risk that the two securitisations would no longer be managed together and, as a result, may lose some or all of the administrative, operational and financial benefits referred to above.

7. Overview of the proposed restructuring solutions

As part of the capital structure review and discussions with stakeholders, the Board undertook an extensive review of the range of restructuring options available in respect of the securitisations to understand which options would be most likely to create a sustainable capital structure, deliver value to stakeholders, have the support of all stakeholders and be capable of being successfully implemented.

A number of alternative options to the restructuring proposal announced today were considered, including:

n Covenant resets: Covenant resets on their own would not reduce debt service obligations and consequently would not create a sustainable capital structure;

n Accelerated asset disposals: Significant acceleration of the non-core asset disposal programme or the disposal of core assets would be likely to be value destructive and would be unlikely to reduce the leverage of the securitisations materially;

n Separating the Punch A and Punch B securitisations: Separating the two securitisations would be likely to result in a loss of operational and financial benefits and therefore would be value destructive; and

n Debt conversion and raising new equity: The provision of new equity was discussed at length with a majority of the Group's shareholders who only indicated support for the proposal set out in this announcement;

In addition, as part of the capital structure review, the Board assessed a range of further alternatives which were proposed by a number of third parties, including a pre-pack administrative receivership of one or both of the securitisations. These alternatives were rejected as being either value destructive or not capable of being implemented successfully. In particular, the Board considers that a pre-pack administrative receivership of one or both of the securitisations would not be feasible in practice in view of the rights of creditors as between themselves and the securitisation companies.

The Board acknowledged that if these alternatives were capable of being successfully executed, they might deliver more value to certain classes of stakeholder. However, having taken detailed advice and having consulted with certain parties whose support would be required in order to implement these alternatives, the Board has concluded that:

n Any such transaction could not be implemented without the support of certain parties on whom such transaction may have a material adverse impact;

n Accordingly, it is very unlikely that it would be possible to implement any of these alternatives successfully and that any attempt to do so would almost certainly result in considerable additional expense and delay; and

n Even if implemented, these alternatives would not materially improve management's ability to execute its business plan and deliver value for all stakeholders.

Following the extensive review process undertaken by the Board, assisted by Punch's advisors, Goldman Sachs and Blackstone, and reflecting the input received during the discussions with stakeholders, the Board has identified proposed restructuring solutions for both securitisations that it believes are in the interests of all stakeholders and are capable of being successfully implemented. The key aspects of these proposed restructuring solutions include:

n Given there are insufficient resources to delever both securitisations and given the contractual linkages across the group, there are different restructuring proposals for both the Punch A and Punch B securitisations, the successful implementation of which will not be interconditional;

n Amendments to the Punch A securitisation structure to amend financial covenants and defer amortisation across all classes of the debt within the securitisation for five years to change the profile of required debt service and reduce the risk of a covenant default; and

n Use of £93 million of the available cash resources held at the Group level and within the Punch B securitisation, along with an issuance of new junior debt, to extinguish and cancel the B1, B2 and C classes of debt in the Punch B securitisation at a material discount to their par value. The holders of the B1 and B2 classes of debt would receive 75% of the relevant offer price in cash and 25% in a new B3 class of junior debt. The holders of the C class of debt would receive 50% of the relevant offer price in cash and 50% in a new B3 class of junior debt. More detailed terms of these proposal are set out below.

The Board believes that the proposed restructuring solutions have a number of benefits for the Group's stakeholders:

n Allows the Group to use its cash resources to implement a material reduction of £229 million of the outstanding debt of the Punch B securitisation so as to reach a level which the Board believes is sustainable and reduces the risk of a covenant default;

n Reduces the risk of a covenant default in the Punch A securitisation over the next 10 years of the business plan, with the amendments allowing the Punch A securitisation to reduce leverage levels over time;

n Allows both the Punch A and Punch B securitisations to continue to benefit from the material financial and operational benefits of being part of the wider Group; and

n Creates a more sustainable capital structure for the Group that should reduce the uncertainty around its financing arrangements and allow full focus to be given to the delivery of the Group's strategy and operational plan.

Importantly, the preferred restructuring solutions have the support of a number of stakeholders, including:

n A group of five financial institutions, consisting of Glenview Capital, Octavian, Luxor Capital, Alchemy and Avenue Capital, who together manage funds that hold over 50% of the Group's issued share capital, c.25% of the Punch B debt in total and a majority of the total junior debt in Punch B;

n Monoline insurers, Ambac and MBIA who between them guarantee c.£990 million of notes across the two securitisations, including over 50% of the Punch A notes, and whose approval of the proposed restructuring solutions is required;

n The trustees of the Punch B defined benefit pension scheme; and

n In addition, the Board has already commenced discussions with a number of other stakeholders including swap counterparties, liquidity facility providers and other holders of debt in the two securitisations.

While the Board believes that this broad level of support provides a strong basis for further discussions with stakeholders, successful implementation of the proposed restructuring solutions will also require the support of a number of other stakeholders who the Board is aware have a range of views on the proposed restructuring solutions. As a result, the Board is in discussions with a number of those other stakeholders including swap counterparties, liquidity facility providers and other holders of debt in the two securitisations and will seek to engage with all stakeholders as it seeks to reach agreement to implement the proposed restructuring solutions.

8. Summary terms of the proposed restructuring solutions

Proposed amendments to the terms of the Punch A securitisation

Proposed amendments to the terms of the Punch B securitisation

9. Next steps

The Board, with its advisors, has undertaken an exhaustive review of the potential restructuring options available. The proposals set out today will, in the opinion of the Board, deliver value to all stakeholders and are solutions that can be successfully implemented.

The Board is mindful that support is required from a number of stakeholders, who will have a range of views on the proposed restructuring solutions. The Board is keen to engage with all stakeholders to commence the implementation of the proposed restructuring solutions without delay, as the Board continues to be mindful that uncertainty as to the details and timing of the restructuring of the Group's financing arrangements could have a negative impact on the Group's underlying business and may ultimately result in the cessation of financial support to one or both of the Group's securitisations. As a result, the Board believes it is in the interests of all stakeholders to implement the proposed restructuring solutions as soon as possible and expects to commence implementation in the first half of 2013.

10. Additional financial information

The Group currently expects to generate EBITDA of between £210 million and £220 million in the current financial year, with a mid-range EBITDA guidance by securitisation group of:

* EBITDA before Group support into the securitisations and before non-underlying items

The number of pub disposals across each of the next four years is expected to be:

Capital investment and disposal proceeds expectations for the current financial year:

Free cash balance (after transaction costs, liquidity and working capital needs) forecast at 31 March 2013:

The Group expects to have incurred total costs in relation to the capital structure review and proposed restructuring solutions of c.£5 million for the first half of its current financial year and, in the event of a successful implementation of the proposed restructuring solutions, further costs of approximately £5 million. The Group also anticipates that, in the event of a successful implementation of the proposed restructuring solutions, further material stakeholder costs are likely to be incurred, however these costs are being discussed with the relevant stakeholders and have yet to be finalised.

A presentation is available on the Punch website www.punchtaverns.com providing additional historical financial information by securitisation estate and by operating division (core and non-core).