Punch Taverns postpones debt re-jig

The credit crunch has forced Punch Taverns to abandon its attempt to amend the redemption terms of its Spirit debenture bonds.

The move, which Punch described as a "piece of housekeeping", follows meetings with a number of debenture bondholders. One City observer said the decision raises a question mark over a possible sale of the group's Spirit managed estate.

Punch said the get-togethers were to consider a previously announced resolution to amend the terms of the A3, A4 and A5 debenture bonds "to adjust the basis of calculation of amounts payable by [Spirit] on any optional redemption".

However the pubco yesterday revealed that it had withdrawn the proposals and the resolutions will not now be put to the bondholders.

A spokeswoman for Punch said the move had been an attempt to "tidy up the debt" of the group, but that current conditions meant shareholders preferred to leave such debt instruments unchanged for the time being.

Alex Paterson of Liberum Capital said Punch was trying to amend the terms of the debenture in order to give it more flexibility over future financing "and ultimately a possible sale of Spirit, so this is somewhat unhelpful, if not fatal".

Paterson said he remained a seller of Punch, but not of Enterprise Inns, which had upside from its proposed real estate investment trust plans, while Mitchells & Butlers "has fallen to levels which offer considerable value even though news-flow is likely to remain poor for some time".