Punch restructuring Company's financial engineering has harmed the pub industry, says Nils Pratley After 14 months of wrangling, and three sets of proposals for restructuring pounds 2.3bn of securitised debt, pub landlord Punch Taverns still couldn't come up with an agreed deal with its bondholders. Instead, chairman Stephen Billingham produced a fourth proposal, declared the terms "final", and told the various bondholders to vote. If the answer is no among any one of 16 classes of bondholder, he says default and administration will follow. Depending on your point of view, Billingham is either behaving recklessly or is sensibly calling time on a process that has run for long enough. Billingham's gamble is justified. The deep problem is that Punch's capital structure - designed by over-confident, over-paid and long-departed financial engineers - is a complete mess. In the end, a vote seems a reasonable way to proceed. If Billingham's right, Punch Taverns can limp on with a slightly lighter debt burden. But this grotesque financial experiment, which has done only harm to the pub industry, should never be repeated.
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