Punch Taverns plc (“Punch”)
Capital Structure – Progress update
Following the update announcement on 4 November 2013, Punch has continued to hold extensive discussions with a broad range of stakeholders and their advisers from across the Punch A and Punch B securitisations, with the objective of reaching agreement on the terms of a consensual restructuring for both securitisations.
Significant progress has been made during these discussions and the Board is now in a position to set out modified restructuring proposals. A number of significant stakeholders from across the capital structure have indicated a broad level of support for the revised structure of these proposals, although there remain a number of areas on which consensus is still to be reached.
The modified restructuring proposals reflect a number of structural changes requested by senior and junior noteholders, including:
Deleveraging of the Punch A securitisation: noteholders benefit from a reduction in leverage at completion;
Reduction in cash leakage: senior noteholders benefit from a c.54% reduction in cash paid to other stakeholders (over three years) compared to a scenario in which the restructuring proposals are not implemented;
Repayment of senior notes to a fixed amortisation schedule: senior noteholders benefit from fixed amortisation based on a 1.2x FCF DSCR and amortisation of senior variable notes from any remaining excess cash flow; and
Junior noteholders to receive cash and new LIBOR based cash pay and PIK notes: junior noteholders will receive a mixture of cash, and new LIBOR based cash pay and or higher coupon PIK notes in a delevered securitisation structure.
The Board believes that the modified restructuring proposals deliver material benefits to all stakeholders, including:
Creates a more robust and sustainable debt structure: next expected refinancing for the Punch A and Punch B securitisations is not anticipated to be until 2027 and 2020 respectively;
Preserves the benefits of the Group structure for all stakeholders: both securitisations will continue to benefit from the material financial and operational synergies, estimated at £25 million per year, which are available to them by virtue of being part of the wider Group; and
Materially better position than the alternative: we expect that the Punch A and Punch B securitisations gross debt to EBITDA ratio would be c.4x lower by 2018 than under a scenario in which the modified restructuring proposals are not implemented.
The Board believes that these revised proposals are in the interests of all stakeholders, are capable of being successfully implemented and that the modified structure of the proposals has the support of a number of significant stakeholders. However, given the nature of the securitisation structures and the differing interests across many of the stakeholder classes, it has not been possible to reflect all of the views received during the engagement process and, as a result, there remain different and conflicting views from some stakeholders on certain aspects of the proposals.
Due to the need to restructure the securitisations to avoid a default in the near-term, Punch will move forward to formally launching final proposals for each securitisation by 15 January 2014. Noteholders will then be asked to vote on the restructuring proposals after the appropriate notice periods.
Further details of the modified restructuring proposals are set out below. Securitisation debt structure tables are also available to view on Punch’s website:
www.punchtavernsplc.com/Punch/Corporate/Investor+Centre/Investor+announcements/2013
Stephen Billingham, Executive Chairman of Punch Taverns plc, commented:
“The modified restructuring proposals reflect the results of an extensive process of engagement with stakeholders and incorporate a number of structural changes requested by both senior and junior noteholders.
We will now move forward to finalising the restructuring for each securitisation and formally launching the restructurings by 15 January 2014.”
9 December 2013
Enquiries:
Punch Taverns plc
Tel: 01283 501 948
Stephen Billingham, Executive Chairman
Steve Dando, Finance Director
Media: Brunswick Tel: 020 7404 5959
Jonathan Glass, Mike Smith
Restructuring:
Goldman Sachs International Tel: 020 7774 1000
Andrew Wilkinson, Sarah Mook
The Blackstone Group International Partners LLP Tel: 020 7451 4000
Martin Gudgeon, David Riddell
Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting as financial adviser to Punch and for no one else in connection with the capital structure review and will not be responsible to anyone other than Punch for providing the protections afforded to clients of Goldman Sachs International nor for providing advice in connection with the capital structure review, the content of this announcement or any matter referred to herein.
The Blackstone Group International Partners LLP, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting as financial adviser to Punch and for no one else in connection with the capital structure review and will not be responsible to anyone other than Punch for providing the protections afforded to clients of The Blackstone Group International Partners LLP nor for providing advice in connection with the capital structure review, the content of this announcement or any matter referred to herein.
Disclaimer
This announcement is not intended to and does not constitute or form part of any offer to sell or invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the restructuring proposals set out herein or otherwise, nor shall it (or the fact of its distribution) form the basis of, or be relied on in connection with, any contract therefor or be considered a recommendation that any investor should subscribe for or purchase or invest in any securities.
The securities referred to herein (including those proposed to be issued pursuant to the restructuring proposals set out herein) have not been and will not be registered under the U.S. Securities Act of 1933 as amended (the “Securities Act”) or under any U.S. state securities laws and may not be offered or sold within the United States unless any such securities are registered under the Securities Act or an exemption from the registration requirements of the Securities Act and any applicable state laws is available.
This announcement contains certain statements about the future outlook for the Punch group that are or may constitute “forward-looking statements”. Because such statements are inherently subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. As a result, you should not rely on any of these forward-looking statements. Any forward-looking statements included in this announcement are made only as of the date of this announcement, and except as otherwise required by law, we undertake no obligation to publicly update or revise any such forward-looking statements to reflect subsequent events or circumstances.