Punch pubs say cheers to rescue

BRITAIN’S second-biggest pub company, Punch Taverns, looks set to be saved from collapse. A powerful bondholder committee is understood to have approved a restructuring proposal.

The beleaguered pub company built up a £2.3billion debt pile after mortgaging its pubs to fuel ambitious expansion plans before the economic downturn hit and left it unable to service its borrowings.

Punch, which owns around 4,000 pubs, has been in talks with its debt holders for more than 18 months, with the different sides failing to reach agreement on a succession of proposals.

Until now, a committee of leading bondholders has rejected every deal, but it is understood to be pleased with the latest rescue plan.

The compromise deal will see existing equity in the company significantly diluted to 15 per cent, while a debt-for-equity swap will leave junior bondholders with the remaining 85 per cent after buying shares at a discount.

Debt will be reduced by 26 per cent to about £1.5billion.

Like many pub companies, Punch has been hit by the smoking ban, competition from supermarkets and a general decline in alcohol consumption.