London, England, United Kingdom (4E) – In a recent announcement, Punch Taverns Plc announced to the public the full terms of its plan to restructure its existing GBP2.3 billion or USD3.9 billion debt. The Burton-Upon-Trent, England based firm issued the statement backed up by investors owning 65% of shares in its Punch A and Punch B securities and has ownership of 54% of its equity share capitalization.
In the said restructuring plan, it is expected that the debt would decrease at least by GBP600 million by permitting some junior creditors to exchange notes for new securities, as well as cash or other shares. There are also plans to sell new shares of stock that would be distributed between fund managers, namely Angelo Gordon & Co., Avenue Europe International Management LP and Oaktree Capital Management LLC.
According to Punch Chairman of the Board Stephen Billingham said, “It is of critical importance that shareholders and noteholders vote in favor of the resolutions in order to implement the restructuring and avoid the adverse consequences for the Group of the restructuring not proceeding.”
The company, which owns or operates 4,000 pubs have been deep in negotiations with shareholders and bondholders since October 2012. The market had changed drastically, with beer consumption falling acutely because of a recent smoking ban imposed on pubs. This was exacerbated by supermarkets offering alcohol at discount prices.
The deadline for the deal is on August 11, but an extension of ten working days was recently put in place to allow both parties to iron out the kinks. According to the company, “some additional time is required to conclude discussions between certain stakeholders and for the documentation to be finalized.” Despite this apparent setback, the board of Punch Tavern is confident that an agreement broadly similar to what was earlier announced would be forged during this period.
In an update issued earlier this morning, “Punch will shortly issue a combined circular and prospectus to its shareholders, setting out details of the proposals and convening a general meeting for 17 September 2014 at which the requisite resolutions to approve the proposals will be put to shareholders. Punch is also issuing documents convening meetings of each class of noteholders in Punch A and Punch B for 17 September 2014 to approve the proposals.”
The announcement added, “If all requisite shareholder, noteholder and other creditor approvals are obtained, the proposals are expected to become effective, and dealings in the New Ordinary Shares are expected to commence, on 8 October 2014.”
One of the drawbacks of the proposed restructuring is the diminution of shareholding value from its original 100% to just 15%. Another questionable provision is the windfall of GBP275,000 bonus to be received by Finance Director Steve Dando should the restructuring plan push through.
Finally, Billingham said, “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 favor of the resolutions in order to implement the restructuring and avoid the adverse consequences for the group of the restructuring not proceeding.”