Punch Taverns Plc, the owner of about 4,500 U.K. pubs, surged to the highest price in 18 months after saying it plans to restructure 2.4 billion pounds ($3.8 billion) of mortgage-backed bonds.
The stock climbed 21 percent to 13 pence, the biggest jump since August 2009, leading advancing companies on the FTSE All-Share Index. Punch rose as much as 47 percent earlier in the day. Trading volume was almost 17 times the three-month daily average.
“The current situation is not sustainable so we need to do something about our capital structure, which at the moment has too much debt,” Stephen Billingham, Punch Taverns’ executive chairman, said in a telephone interview. “This proposal doesn’t involve bringing new investors in, nor is it a debt for equity proposal.”
Punch started talks with some of its biggest investors and bondholders last year on possible options for restructuring its debt, which is split between two bond issues. It’s proposing to delay repayments to Punch A notes and cut 229 million pounds from the Punch B issue, according to a statement.
The deal would reduce annual interest payments by about 10 million pounds and is supported by holders of more than 50 percent of the shares, Billingham said. It needs approval from investors holding at least 75 percent of each of the 16 classes of Punch A and B notes, bond insurers Ambac Financial Group Inc. and MBIA Inc., as well as swap counterparties, he said.