Punch Seeks Debt Test Waiver to Gain Time for Restructuring

Punch Taverns Plc is seeking to suspend covenants on 2.3 billion pounds ($3.8 billion) of debt to give it more time for restructuring talks with bondholders.

The owner of more than 4,000 pubs across the U.K. wants to waive the debt interest covenant and other provisions under its securitized borrowings until Aug. 29 at the latest, according to a company statement. The company has scheduled an April 29 vote for holders of its Punch A and Punch B securitizations.

“The waivers are necessary to avoid the risk of a near-term default in both securitisations, which in the case of Punch A securitisation is anticipated as early as 15 May 2014,” the Burton upon Trent, England-based company said in the statement.

Punch has failed to get debt holders to agree on restructuring proposals since negotiations began in October 2012. It had proposed cutting debt by canceling some notes in return for cash payments or issuing new securities.

A committee of senior bondholders intends to vote in favor of the company’s request, according to an e-mailed statement from Rothschild, which advises the group.

The company has 16 classes of notes across two securitizations, known as Punch A and Punch B. It must begin restructuring its debt by June 30 as part of the conditions of the waiver, according to the statement. All classes of creditors must approve the debt service cover ratio waiver request.