Wed 5th Feb 2014 - Breaking News - Punch chairman – failure to restructure will lead to default Punch chairman – failure to restructure will lead to default: Punch Taverns chairman Stephen Billingham has issued a stark warning to its bondholders – a failure to restructure the company will lead to default on its securitisations. He described the next few days, when bondholders are due to vote on restructure proposals, as among the ‘most important in the company history’. Punch Taverns needs 75% of its bondholders to vote in favour of the current restructuring proposals – although some key stakeholders have already voiced their opposition to the plans. Billingham said: “The next few days will be some of the most important in the company’s history. The Punch board calls on all parties to vote in favour of the restructuring proposals. It is well known that certain creditors with blocking stakes have said they do not support the proposals. There are also other creditors with conflicting views who have blocking stakes. We have tried to listen to everyone and find a middle way. While it is not possible to accommodate all of the conflicting views, Punch has attempted over a 14 month period of engagement and at significant financial cost and management time to find a balance between these conflicting views. The restructuring proposals incorporate a significant number of stakeholder requests, as set out on 15 January 2014. The proposals would deliver a capital structure with material deleveraging of senior notes, and enhanced junior note PIK interest. Although they would result in debt to EBITDA of circa nine times and an interest expense of circa 9% per annum, which is at the upper limit for a pub securitisation, the board believes that they would provide a stable capital structure. The board believes that the restructuring proposals deliver more value for all noteholders than default. Everyone has something to gain by voting for the proposals. Failure to effect a restructuring will lead to a default in the securitisation, which is expected to have a material negative impact on the business. Punch has a very good underlying business with a positive future and its assets provide a focal point for 4,000 communities across the UK. Just as Punch’s operational performance is turning the corner, the last thing the business needs is for continued uncertainty. The restructuring would provide certainty and stability for the business from which all stakeholders will benefit. In the next few days stakeholders have it in their hands to vote in favour of the restructuring proposals to end this uncertainty.”