Punch Bondholder Standoff Pushing Restructuring to Deadline

Punch Taverns Plc’s plan to restructure 2.3 billion pounds ($3.8 billion) of debt is being pushed to the wire by bondholders rejecting the U.K. pub operator’s final proposal and demanding it re-open negotiations.

It’s the fourth time creditors have spurned offers from the company, which said this month a deal must be reached to avoid default. Noteholders will vote on the plan on Feb. 14.

Angelo Gordon Europe, Oaktree Capital Group LLC and Warwick Capital Partners LLP joined with a senior bondholder committee to demand better terms. “The creditors remain willing to work in good faith to agree a consensual restructuring,” according to an e-mailed statement.

The Burton-upon-Trent, England-based owner of more than 4,000 pubs told noteholders Jan. 15 that its latest offer had to be accepted to avoid default. Punch has been negotiating with creditor since October 2012 to lower its debt burden as it seeks to combat a long-term decline in sales.

“The company continues to be available to discuss with creditors their views of the restructuring proposals,” Punch said in a statement today.

Punch shares fell 2 pence to 14 pence at 3:45 p.m. in London, the biggest decline since Sept. 2011.

The company said this month it will reduce borrowings by canceling some notes in return for cash payments or issue new securities to bondholders. It also offered to increase interest rates on some debt, modify repayments on other parts and strengthen covenants.

Punch has 16 classes of notes across two securitization financings, known as Punch A and Punch B. The bondholder committee includes Kames Capital Plc, Legal & General Plc, Prudential Plc’s M&G unit, Standard Life Plc and Aviva Plc and is advised by investment bank Rothschild, according to an investor conference call last year.

The bondholders said they have blocking positions in a number of classes of notes.

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