Punch Taverns Plc said it’s seeking more time to agree on a 2.3 billion-pound ($3.9 billion) debt restructuring after its proposals got support from a “broad range of stakeholders.”
The U.K. owner of more than 4,000 pubs has called a meeting of noteholders on July 18 to vote on an extension of its debt waiver, the Burton-upon-Trent, England-based company said in a statement today. The temporary suspension of the debt covenants expires Aug. 4 if a restructuring does not begin by July 3, and Punch says it wouldn’t be possible to meet the deadline.
“There are still hurdles to be overcome before reaching complete agreement but we view the current situation as very positive,” Stephen Billingham, executive chairman of Punch Taverns, said in a statement yesterday. “Continued constructive dialogue and determination from all involved will be required to achieve this.”
Punch plans to cut debt by about 600 million pounds as part of the restructuring that will dilute existing shareholders, according to yesterday’s statement. It has also given details of proposals that allow some junior creditors to buy shares in the company at a discount so Punch can repay junior notes in the Punch A securitization for less than face value.
“The agreement, which is the result of intense negotiations in recent months between the ABI and Punch Taverns’s other key creditors, will see Punch Taverns emerge with a sustainable capital structure,” Robert Hingley, director of investment affairs at the ABI Special Committee of Punch’s bondholders, said in an e-mailed statement yesterday.
The waiver request needs the approval of all classes of noteholders in Punch A and Punch B as well as other securitization creditors, the pub chain said in today’s statement. Punch has 16 classes of notes across two securitizations operated by independent boards.
If approved, the latest waiver request will expire by Nov. 19 as long as certain conditions are met, according to the statement.
Punch started negotiations with stakeholders in October 2012. The company is trying to lower its debt burden after the U.K. recession hurt the pub industry, which was already suffering from a decline in beer consumption following a smoking ban and competition from supermarkets selling discount alcohol.