LONDON (Alliance News) - Punch Taverns Wednesday said noteholders as well as its shareholders have approved its debt restructuring proposals.
Completion of the restructuring remains subject to the consent of The Royal Bank of Scotland Group PLC, which provides liquidity to the Punch A and Punch B securitisations and hedging arrangements to the Punch A securitisation, Lloyds Banking Group PLC, which provides liquidity facilities to the Punch A securitisation.
The pub operator set out the terms of its latest debt restructuring last month, and at that time said it had the support of stakeholders owning or controlling about 65% of the notes across its Punch A and Punch B securitisations, as well as about 54% of its share capital.
In a statement earlier this month, Punch said it had support of about 72% of the notes across the Punch A and Punch B Securitisations and still about 54% of its share capital. The increase came after seven holders of junior classes of notes in the Punch A and Punch B Securitisations bought class B3 notes issued by the Punch A Securitisation on the market as well as doing a deal with US bank Morgan Stanley.
The seven funds comprise investment funds managed or advised by Alchemy Special Opportunities LLP, Avenue Europe International Management L.P., Angelo, Gordon & Co. LP, Glenview Capital Management LLC, Luxor Capital Group LP, Oaktree Capital Management LP, and Warwick Capital Partners LLP.
Talks over the debt restructuring have been dragging on, with different classes of Punch creditors disagreeing on various proposals to restructure the debt because any proposal will bring disadvantages to one class or another.
The company ran up a debt pile of several billion pounds through an expansion spree, but was then hit hard when the financial crisis and ensuing economic downturn weighed on its trading.
Its Punch A securitisation is GBP1.42 billion of gross debt secured against 2,272 pubs and the Punch B securitisation is GBP861 million of gross debt secured against 1,619 pubs.
It has been selling off hundreds of pubs to help bring down its debt and shore up its balance sheet. It realised GBP51 million of net proceeds from the sale of 140 pubs and other assets in the first half of its financial year which ended March 1.
The proposal for debt restructuring that Punch Taverns set out on August 18 will reduce net debt, including the mark-to-market on interest rate swaps, by GBP600.0 million, but will mean a significant equity dilution for its existing shareholders as it involves a debt-for-equity swap.
Implementation of the proposals is conditional upon the approval of Punch's shareholders, all classes of noteholders in Punch A and Punch B, as well as other securitisation creditors.
The new shares resulting from the debt-for-equity swap will start trading on October 8.
The stock closed up 3.9% at 9.35 pence Wednesday.
By Anthony Tshibangu; anthonytshibangu@alliancenews.com; @AnthonyAllNews
Copyright 2014 Alliance News Limited.
