A committee representing senior Punch Taverns noteholders has said it would vote against the pub company’s current debt restructure proposals.
The Association of British Insurers (ABI) Senior Noteholder Committee wants a number of changes, including limiting maximum capex to £15,000 per core pub per year and putting “board observers” into the corporate structure, before it can agree to the plans.
It said the proposals, announced on Monday, “while moving in the right direction, still need further work to gain approval and would be voted against if published in the form announced”.
In a statement released this afternoon, the ABI said its objections include the proposal to use securitisation cash in the restructure of Punch A.
“It is not agreed to give the company or any third party a right to cash out senior notes at a price of 105. The Committee could support a tender using securitisation cash across tranches of notes, priced equitably and fairly,” the group said.
It warns of “cash leakage to the shareholder” in Punch A. The Committee said payments of securitisation cash to the shareholder or Punch ”are not acceptable until total leverage (including hedge MTM) is below 3.0x”.
In the Punch B securitisation, the ABI also said cash leakage to the reinstated B3 note should be less than £5m per annum, noting that Punch’s current plan is a LIBOR-linked variable rate instrument.
The Committee said it would need additional terms to be made to the proposals.
As well as restricting maximum capex per core pub to £15,000 per year, it wants to see a 25bps voting fee for senior noteholders, and to protect the value of the senior notes’ collateral, a maximum of 2% per annum, or up to 10% of all core pubs, are permitted to be disposed.
The Committee wants “board observers” at Punch’s corporate structure and would have the right to appoint a majority of the board at either the Punch A or Punch B Borrower, should the total leverage exceed 8.0x. It says the restructuring of Punch A and Punch B needs to be interconditional.
The ABI said: “We continue to believe that a consensual deal is the best way forward for all parties. We believe such agreement is capable of being reached and within the gift of the shareholders of Punch.
“The ABI Committee as a group has blocking stakes in a number of classes of Punch A and B notes, including the Class A of both transactions. The ABI Committee is advised by Rothschild and Latham & Watkins; its advisors remain available and open for discussions with other stakeholders.”
On Monday Punch said it hopes to launch its final proposal by 15 January.
The company said “significant progress” had been made in discussions with its stakeholders and it’s now in a position to set out modified restructuring proposals. However, there are “different and conflicting views from some stakeholders on certain aspects of the proposals”.
