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Punch Taverns Changes Restructuring Deal to Win Over Bondholders

Punch Taverns Plc, the owner of more than 4,000 U.K. pubs, changed the terms of its proposed 2.3 billion-pound ($3.6 billion) debt restructuring as it seeks to win support from bondholders.

The revised proposal includes faster repayments of its senior notes, limits on the amount of cash that can be removed from bonds securitizing income from the pubs, and an offer to buy back some higher-ranking bonds, according to a statement from the company. The offer cuts Punch’s total debt service payments by more than 600 million pounds in the next five years.

Senior noteholders rejected an earlier deal because they said it didn’t address the business’s operational issues or provide a way for the debt to be refinanced or repaid. The Staffordshire, England-based company proposed a restructuring in February to delay repayments to one of its securitizations and cut the size of the other by 229 million pounds through a deal with junior bondholders.

Today’s changes direct “more of the finite cash resources available to the group to the senior classes of notes, while still providing good value recovery for the junior classes of notes,” Stephen Billingham, Punch’s executive chairman, said in the statement. “Support is required from a number of stakeholders who will have a range of views.”

The restructuring requires the backing of investors holding at least 75 percent of each of the 16 classes of Punch notes, bond insurers Ambac Financial Group Inc. and MBIA Inc., as well as swap counter-parties, Billingham said earlier this year.

A meeting with the company’s stakeholders will take place this week to discuss the detail of the proposals, Punch said.

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