Stephen Billingham, chairman of Punch Taverns Plc (PUB), the U.K. pub owner that had its proposal to restructure 2.4 billion pound ($3.7 billion) of debt rejected by bondholders last month, said the debt plan works.
“We think the proposal is the best one, it is the one that works,” said Billingham in a telephone interview today. “It is very difficult to work out what a counter proposal would look like. It’s not a straightforward normal restructuring, avenues available are relatively small.”
A committee, formed in December 2010 and largely representing senior bondholders, rejected the offer in March. The Association of British Insurers committee said it didn’t address the business’s operational issues or provide a way for the debt to be refinanced or repaid.
Punch has two unsustainable debt structures, called Punch A and Punch B, which need cash injected to avoid a breach of covenants. Under the plan proposed on Feb. 7, Punch would cut the debt in one of its vehicles by 229 million pounds through a deal with junior bondholders. Punch proposed paying them 93 million pounds in cash and issue new debt worth 56 million pounds.
The deal would reduce annual interest payments by about 10 million pounds and had the support of holders of more than 50 percent of shares, said the Staffordshire, England-based company.
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