PUNCH TAVERNS PLC
(“Punch” or “the Group”)
Restructuring and half year trading update for the 28 weeks to 1 March 2014
The Group will complete its 28 week half year on 1 March 2014 and expects to issue its interim results for the same period towards the end of April 2014.
Trading
Trading has continued in line with management expectations with core estate like-for-like net income for the half year expected to be broadly in line with the 1.5% growth reported for the first 20 weeks to 4 January 2014.
Management expectations for the full year remain unchanged with the core estate expected to deliver like-for-like net income growth of up to 1%. The pub investment and non-core pub disposal programmes remain on track with full year capital investment expected to be c.£45m and disposal proceeds anticipated to be c.£100m.
Restructuring update
As announced on 12 February 2014, Punch has extended the period of engagement with stakeholders and the Board remains of the view that a consensual restructuring is in the best interests of all stakeholders.
Neither securitisation has acquired bonds nor benefitted from EBITDA support in the most recent quarter. Underlying trading for the half year is expected to be broadly in line with management expectations and consequently, while we cannot predict with certainty what the DSCR (Debt Service Cover Ratio) level will be, we anticipate that one or both securitisations will fail their respective DSCR financial covenants with respect to the covenant testing date of 1 March 2014 when they are next tested and reported on 15 April 2014.
In the absence of a consensual restructuring, failure to achieve the second quarter DSCR financial covenant in the relevant securitisation when reported on 15 April 2014 would result in a default in the relevant securitisation within a further 30 days.
Moreover, failure to effect a restructuring in the near-term will lead to a default in both the Punch A and Punch B securitisation, which is expected to have a material negative impact on the business, including material dissynergies and disruption to the business. As a result, it is in the interests of all parties to agree a consensual restructuring ahead of the next covenant reporting date of 15 April 2014, and to put in place a sustainable long-term capital structure for the securitisations.
Stephen Billingham, Executive Chairman of Punch Taverns plc, commented:
“We are convinced that a consensual restructuring is by far the best outcome for all stakeholders, and we will continue to work with all stakeholders to reach a consensus on the restructuring. No-one can be in any doubt about the consequences of failing to agree a consensual deal.
We call on all parties to work together constructively to agree a restructuring. Everyone has something to gain by agreeing a restructuring that will retain the material financial synergies and provide certainty and stability for the business from which all stakeholders will benefit.”
28 February 2014
Enquiries:
Punch Taverns plc Tel: 01283 501 948
Stephen Billingham, Executive Chairman
Steve Dando, Finance Director
Brunswick Tel: 020 7404 5959
Jonathan Glass, Mike Smith
Forward-looking statements:
This announcement may contain certain statements about the future outlook for Punch. Although we believe our expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.