A group of bondholders to Punch Taverns LLC, the owner of about 4,500 U.K. pubs, said they don’t back the company’s proposal to restructure its 2.4 billion pounds ($3.6 billion) of debt.
The creditors, who formed a committee in December 2010, said the Feb. 7 offer from the company does not provide a solution for its capital structure, according to an e-mailed statement from Rothschild, an adviser to the group.
“An acceptable proposal will reflect the contractual entitlements of the parties, including the waterfalls and priorities of the existing notes,” Rothschild said in the statement. The committee includes Kames Capital Plc, Legal & General Plc, Prudential Plc’s M&G unit, Standard Life Plc and Aviva Plc, note holders were told last month in an investor conference call.
Punch Taverns board believes it is in the interest of all parties to agree to a consensual restructuring, a spokesman for Punch Taverns, who requested not to be named citing company policy, said in an e-mailed statement. “The Board has always been aware that there are a range of views on the restructuring proposals.”
The bondholders, who mostly hold senior-ranking portions of Staffordshire, England-based Punch’s mortgage-backed debt, said the offer doesn’t address the business’s operational issues or provide a way for the debt to be refinanced or repaid, Rothschild said on a bondholder call last month.
Punch’s debt comprises two securitizations and its offer proposes to delay repayments to the Punch A notes and cut 229 million pounds from the Punch B issue, it said in a Feb. 7 statement. 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.
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 counter-parties, Stephen Billingham Punch Taverns’ executive chairman said at the time.