Honeycombe Leisure has struck a "sale and manage" deal on a dozen pubs with Punch Taverns that looks certain to be the blueprint for more agreements between big property-owning pubcos and management specialists in the future.
The deal sees Punch pay Honeycombe £11.7m in cash for 12 of its bigger managed houses, at the same time signing a 20-year agreement for Honeycombe to continue to manage the pubs.
James Baer, Honeycombe's chief executive, said the deal "provides a potential template for future deals by which Honeycombe can grow its estate without the need to raise further equity or take on additional debt."
The hybrid tied lease arrangement, described as "innovative" by Punch, gives the company a higher proportion of the profits from the 12 pubs than it would get under a standard sale-and-leaseback.
Giles Thorley, chief executive of Punch Taverns, said: 'We are very pleased with this transaction. We have admired the quality of Honeycombe's operation for some time and have been discussing with them ways of developing a mutually beneficial relationship. This transaction brings together the finance and capital capability of Punch with the retailing skills of Honeycombe. We see this as a template for similar deals in the future."
Honeycombe will use the money it is getting from Punch to reduce its borrowing, and bring its gearing down from 263% to 180%.
Baer said Honeycombe woulkd continue to own and operate its own core estate, at the same time as it sought to increase its pubs under management through management agreements with Nectar Taverns, more university site deals with Jarvis and its relationship with Punch.
The 12 pubs involved in the deal generated earnings before interest, tax and depreciation of £1.67m. They had a net book value of £10.4m, giving Honeycombe an exceptional profit on their sale of £1.1m. Their purchase takes Punch to 4,490 pubs in total.
Both companies' shares rose up early morning tgrading today, with Honeycombe up 3p to 50.5p and Punch up 0.5p to 169.5p
The deal sees Punch pay Honeycombe £11.7m in cash for 12 of its bigger managed houses, at the same time signing a 20-year agreement for Honeycombe to continue to manage the pubs.
James Baer, Honeycombe's chief executive, said the deal "provides a potential template for future deals by which Honeycombe can grow its estate without the need to raise further equity or take on additional debt."
The hybrid tied lease arrangement, described as "innovative" by Punch, gives the company a higher proportion of the profits from the 12 pubs than it would get under a standard sale-and-leaseback.
Giles Thorley, chief executive of Punch Taverns, said: 'We are very pleased with this transaction. We have admired the quality of Honeycombe's operation for some time and have been discussing with them ways of developing a mutually beneficial relationship. This transaction brings together the finance and capital capability of Punch with the retailing skills of Honeycombe. We see this as a template for similar deals in the future."
Honeycombe will use the money it is getting from Punch to reduce its borrowing, and bring its gearing down from 263% to 180%.
Baer said Honeycombe woulkd continue to own and operate its own core estate, at the same time as it sought to increase its pubs under management through management agreements with Nectar Taverns, more university site deals with Jarvis and its relationship with Punch.
The 12 pubs involved in the deal generated earnings before interest, tax and depreciation of £1.67m. They had a net book value of £10.4m, giving Honeycombe an exceptional profit on their sale of £1.1m. Their purchase takes Punch to 4,490 pubs in total.
Both companies' shares rose up early morning tgrading today, with Honeycombe up 3p to 50.5p and Punch up 0.5p to 169.5p
