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Mon 4th Nov 2013 - Breaking News - Punch to reveal restructuring proposals in December
Punch to reveal restructuring proposals in December: Punch Taverns has reported that it will unveil a revised restructuring proposal in early December “with the broadest level of support achieveable at that time”. The company will then formally launch the implementation proposal shortly thereafter. In a statement issued today, the company made clear the problems it is facing in squaring the competing interests of different stakeholders.The company stated: “Since the announcement of Punch’s preliminary results on 25 September 2013, Punch has continued to engage in extensive discussions with stakeholders and their advisers from across the Punch A and Punch B securitisations (including the advisers to the ABI Special Committee of noteholders), with the objective of reaching agreement on the terms of a consensual restructuring for both securitisation structures. Given the nature of the securitisation structures and the differing interests across many of the stakeholder classes, a number of conflicting stakeholder views have been received across a broad range of topics during the engagement process from both noteholders and other securitisation creditors. In response to the proposals announced by Punch on 10 June 2013, certain senior creditors have requested that a greater proportion of the available cash resources is allocated to senior creditors (in the case of senior noteholders based on fixed note amortisation schedules) with junior creditors receiving a mixture of reinstated PIK notes, cash and equity. These proposals from certain senior creditors are inconsistent with the request from certain junior creditors that value is allocated to the junior notes in recognition of their ability to benefit from the ongoing cashflows and liquidity facilities within the securitisation structures notwithstanding default and are inconsistent with the position of shareholders who are unwilling to contemplate dilution. While these requests conflict with each other, Punch is continuing to work with stakeholders with the objective of helping all parties move towards a restructuring proposal that can be supported by stakeholders. Punch will announce a revised restructuring proposal during the first week of December 2013 with the broadest level of support achievable at that time and will then formally launch the implementation of that restructuring proposal shortly thereafter.” Punch added: “Failure to achieve a consensual restructuring of both securitisations would, in the Board’s opinion, give rise to the risk of material dissynergies across the two securitisations and the wider Punch group and disruption to the business. As a result, it is in the interests of all parties to agree a consensual restructuring to avoid such dissynergies and disruption and to put in place a sustainable long-term capital structure for the securitisations. As previously announced, the securitisations continue to require financial support to maintain compliance with their DSCR covenants and the provision of such support to the securitisations by the Punch group remains under ongoing review. Such financial support could involve the use of cash resources held outside the securitisations to lower the cost of drinks supplied to the securitisations or other actions available to management to avoid a covenant default in the relevant securitisation, including the repurchase and cancellation of securitisation debt at a discount.”
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