A senior City analyst has argued that the “status quo” at Punch Taverns is “not an option”, writes Paul Charity. Douglas Jack, of Numis Securities, has claimed that the managed division at Punch should be de-merged. He points out that Punch’s A and B bond leased estates “carry no equity valuation” to be judged. Jack insists that any “option value” in the leased estate “rests on the possibility of management successfully renegotiating the bond debt down to a realistic level” — he suggests a compromise with bondholders could be to extend the life of existing bonds, thereby stretching out the amortisation profile. On the argument for de-merging the managed estate, he said: “With the Spirit bond likely to exit cash trap in 2012, when the re-branding programme should be complete, a de-merger should enable some of the PLC cash to be returned to shareholders and dividend payments to resume in 2013.” Jack insists that there are only two options for Punch management — to renegotiate the terms of the A and B bonds with bondholders to prevent the further loss of equity or, more realistically, to “de-merge the A & B bond (leased) estates” to create a “fast-growing, stand-alone managed pub investment vehicle”. The stand-alone managed company could be boosted by some of the 564 Spirit bond leased pubs being transferred back from leased to managed.