Punch Taverns is likely to slow down its disposals to 300 to 350 per year in 2014, says finance director Steve Dando who also told M&C Report he’s “confident” Punch’s debt restructure will occur in the second half of 2013.
On Tuesday the pub company announced a new deadline of the second half of 2013 to complete its restructure and Dando said: “Extending the deadline gives us more time to talk to people. I don’t think anything has changed in the attitude of people, we just need more time.”
After why the original deadline was not met, he said: “It’s quite a complex restructure. There are 16 different tranches of debt, a lot of people need to agree to the restructure and it makes sense to give people as much time as possible.”
Asked how confident he was that it would be resolved in the new time frame, he said: “We are confident. We missed the first timetable but we are pretty confident of being able to deliver something [within the new timetable].”
He said revised proposals for the restructure would need to be published before the process is completed.
“I don’t think something will happen in the next month, it does take time and we’re actively having conversations at the moment. We are talking about a number of months.”
This summer a committee of senior Punch bondholders under the auspices of the Association of British Insurers said new proposals for the restructure were “some distance” from being acceptable to them, with some parts “vague” and “not fully formed”. Punch later said some of the committee’s statements were “inaccurate”.
The proposals included improving covenant protection for creditors and accelerating repayment of senior noteholders ahead of other stakeholders.
At its trading update on Tuesday Punch said it had disposed of 433 pubs in its financial year to 17 August. Dando said: “We’ve still got 1,100 pubs in non-core division. I would expect we would sell somewhere in the region of 300 to 350 pubs next year. That represents c25%.”
Punch said 48 pubs have so far been converted to its Punch Foundation Tenancy agreement, its franchise-style scheme for newcomers. Dando said the company still hoped to have c200 pubs under the agreement by the end of next year,
“The uplift in sales has been significant in these pubs,” he said. “The fact we’ve got a dedicated field specialist working with the new partners, week in week out, helping them in the first six months of operation, backed up by all of the support we have, has a massive impact on the partners and the partners’ businesses.”
Punch reported its first quarter of net income growth since its demerger from Spirit in the 12 weeks to 17 August, with core estate net income up 0.4%.
Dando said: “July and August was very good. There’s no doubt the improved weather this year versus last year has helped the pubs.”
But he stressed that there was also “steady underlying growth” in the businesses,
“The fact we are 96% let on substantive leases, that’s as high as it’s ever been. If we give people the right support then people will do well.”
