Punch Taverns has jumped nearly 8% following weekend reports it was considering a plan to hand over up to 6,000 tenanted pubs to its bondholders to reduce its £3bn debt.
The plan would allow Punch, up 4.6p to 63.7p, to concentrate on its 800 or so directly managed pubs. As we previously reported, new Punch chief executive Ian Dyson is said to have hired private equity group Blackstone to advise him before a potential clash with bondholders. He wants significant concessions from them or he will hand back the keys to the underperforming tenancies. Mark Brumby at Langton Capital said:
The radical move would be a departure from the group's recent attempts to reduce its debt via modest disposals, a zero-dividend policy and a share placing during 2009.
Although [this] course of action is only one of several that will be given consideration, the growth of pre-pack administrations has been testament to the fact that a number of operators have sought radical solutions to the problems caused by over-gearing during the period running up to 2007. But most of these solutions have occurred after companies have been taken private as to restructure as a public company is more challenging and, with that in mind, we will await further developments with interest.
