Punch Taverns looks to reduce debt pile

Pub company Punch Taverns is looking to restructure the business or risk having to sell off pubs or enter administration.

Punch Taverns is the biggest leased pub company in the UK and has over 4,200 pubs nationwide. The Sunday Times reported that the firm is due to put forward a plan this week for how to improve relations between the company’s management and some of its main creditors.

It endeavours to renew its efforts to address a large debt burden of £2.4 billion, built up partly during its own acquisition spree. Much of its debts are held in long-term bonds and any left over cash is used to pay off the interest.

If a restructuring plan cannot be agreed upon amongst the parties involved, Punch Taverns could be forced to sell off more of its pubs, or, at worst enter administration. A prior plan - that was rejected by some of the bondholders - would have involved some lenders writing off debts, with others accepting delayed repayments.

Under the new plan some lenders would be given cash to walk away. An investment bank, possibly Goldman Sachs, would meet payments. It is thought that this plan will be viewed as less than satisfactory by the lenders, however.

Established in 1997, with the purchase of a pub portfolio from Bass Lease Company, Punch Taverns has gone on to make some large purchases. It secured a deal to buy Pubmaster, with 3,115 leased and tenanted pubs in late 2003. The next large purchase saw it take on another 1,064 pubs form Innspired Group in 2004. It then bought Spirit Group’s estate of 1,829 managed pubs in 2006.

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