The future of
The U-turn followed opposition from a group of bondholders whose support was crucial for the proposal to go ahead, and the company has been forced to restart talks with these disgruntled investors.
Punch, which ran up debts of pounds 2.3bn by going on an expansion spree before the financial crisis caused a downturn in business, said last month its proposals were final. If they were not passed there was a serious danger of default and "potentially significant loss of value", the company said.
But Punch's plan - the fourth attempt to solve the debt crisis - always looked in danger after the main bondholder group, a band of institutional investors co-ordinating their position through the
As the group holds enough of the 16 different classes of bonds to block the deal, Punch yesterday withdrew its proposals. It said: "Following feedback from a range of stakeholders, Punch has decided to withdraw the resolutions which were to be put to the noteholders meetings convened for 14 February in order to facilitate a period of further engagement with stakeholders.
"The board remains of the view that a consensual restructuring is in the best interests of all stakeholders and can be agreed ahead of the next covenant reporting date of 15 April 2014."
If no deal is reached by then, the two A and B securitisations, which actually own the pubs, are in danger of going into administration, leaving investors with nothing.
Thousands of pub tenants could also lose up to pounds 22.6m in deposits given to Punch. The tenants had to pay an average pounds 6,279 to rent their pubs from Punch, but this had not been ringfenced and could be lost if administrators are called in.
Greg Mulholland MP, chair of the Parliamentary Save the Pub group, wrote to Punch chief executive
"So now there is a pause, the bondholders, who surely must realise that the pubco model is dead, should talk direct to Punch tenants about a realistic and sustainable future."
A source close to the ABI senior bondholder committee said: "Punch has wasted the last two months trying to get their shareholder friendly deal to stick, whilst talking up the risk of default. The process to date has been a shareholder-led attempt to get a deal to stick that is great for shareholders, but doesn't work.
"An alternative restructuring plan is well advanced amongst creditor groups, and the next step is for the Punch A and B boards to engage in discussions directly with their creditors to finalise it."
Punch's shares slumped 5% to 11.875p valuing the heavily indebted company at less than pounds 80m.
Most Popular Stories
- Top Hispanic Tech Companies Push for the Top
- 5 Notable Hispanic Technology Executives
- Russia, Crimea Discuss Referendum
- Taco Bell Rings Up Breakfast Menu
- California Establishes Center for Coffee Study
- Visa, MasterCard Team Up to Focus on Payment Security
- China Urges Malaysia Flight Emergency Response
- For Obama, a Last Stab at Improving Ties with Capitol Hill
- Sunday Starts Daylight Saving Time
- 'Holy grail of guitars' OM-45 Deluxe Available in in NY Auction