Punch Taverns executive chairman Stephen Billingham has warned the company’s stakeholders that there’s “not a lot of leeway” to change the revised proposals for its debt restructure announced today, and the consequences of not supporting it “are possibly quite severe”.
The new proposals include improving covenant protection for creditors and accelerating repayment of senior noteholders ahead of other stakeholders. Punch is also proposing giving senior noteholders the option to sell their senior notes for cash if they accept the proposals, and creating an option for certain senior noteholders to waive their rights to note prepayment.
The company hopes to have the restructure agreed this month.
Billingham said it was possible that the proposals could be modified “marginally” but stressed: “There’s not a lot of leeway to change it from where we are now if we want to keep the equitable position we tried to adopt in trying to deal with all stakeholders fairly.
“We haven’t thought further about [whether] would we offer another proposal in due course. What we want is [stakeholders] to look at this and say this is a good deal for them.”
Billingham warned that anyone voting against the plan “should not do it lightly” as the consequences “are possibly quite severe because you end up possibly in default in the structure”.
He said there was a “real limit” to how long the directors of PGE, the intermediary holding company of the Punch structure, could support Punch A securitisation if the new proposals are voted down, although he said there’s “no finite date”.
Billingham conceded that Punch’s engagement with some of its stakeholders “hasn’t been as good as it should be but we’ve tried immensely hard to get good engagement”.
“We’ve offered management time, advisors’ time and our resources to ensure that engagement [takes place].
“If I have one regret about all this is the engagement with some of the stakeholders has not been as good as it could have been but it’s not for the want of trying on our behalf.”
He emphasised to stakeholders that there’s “a lot riding on this”. “There’s lots of good people who want this to succeed and we have a duty to make sure we are doing the best for everybody involved in this.”
Leading analyst Simon French of Panmure Gordon said that from an equity perspective, the most important proposal from Punch is that improved covenant protection for creditors means there would be no ability to upstream excess cash out of the securitisations, save for £4m to meet on-going group costs and liabilities, compared to the previous proposal of 25% of Punch B cash being upstreamed.
“We would also highlight that the group intends to provide a proportion of class A fixed rate noteholders in the Punch A and Punch B securitisations with an option to sell their senior notes for cash in conjunction with acceptance of the revised restructuring proposals.”
