Troubled pub chain Punch Taverns continues to explore debt solutions

drinksDebt-ridden pub chain Punch Taverns has seen its share prices fall even further, as details of its newest refinancing package were announced.

The company’s £2.3 billion debt issues have been the result of over ten years of expansion and acquisition of a vast number of pub premises, but it is hoped that this new strategy will steady the ship financially: some creditors will be offered a debt-for-equity exchange, whilst others will have the option to obtain shares at a special cut price. And following a number of plans to secure the future of the organisation, the latest initiative is particularly significant, in that over 30% of debt holders connected to the company are in support of the plan. This means that unlike previous initiatives, this one has chance to go through.

However, the complex nature of the restructure may see a delay in any settlements and, as such, shares in the company fell by almost a third earlier this week as its future remains insecure. Although Punch Taverns remains the UK’s second largest pub landlord, shares plummeted by 4.25p following the recent restructuring announcement. Many investment experts have advised people to sell their shares sooner rather than later. Furthermore, many shareholders remain concerned that although the planned package will reduce the company’s overall debts, it will also reduce their investment’s worth.

Executive chairman of Punch Taverns, Stephen Billingham, has been quick to assure not just shareholders but all interested parties, that any decision regarding financial restructure will not be taken lightly. Speaking to the press, he said: “Any decision by the board to recommend a proposal involving dilution of existing shareholders would need to be carefully considered in terms of the value which is represents for existing shareholders.”

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