Punch Taverns likely to see pubs revert

Punch Taverns is likely to see a number of leased pubs revert in the wake of the administration of Orchid Pub Company. There are 48 pubs currently in administration with PricewaterhouseCoopers (PwC).

It is thought that Orchid is in negotiation with landlords to take back around half of the 48 leasehold sites. However, landlords, which include British Land and Prestbury, may believe that it is preferable to refuse assignment and allow the pubs to revert to Punch on the basis of its superior covenant. Most of the properties were sold to the two property investment groups through a sale-and-leaseback deal undertaken by previous owner Spirit Group.

The sites that are unwanted by Orchid are likely to have onerous rental obligations, although the leasehold sites that Orchid is in negotiation over will be producing decent profits. A Punch Taverns source said: "We are in discussions with the administrator and expect we will get some sites back." The 48 sites were left behind - or 'dumped' - after Orchid was the subject of a pre-packed administration through PricewaterhouseCoopers. Part of the deal saw Deutsche Bank and HBOS, Orchid's two main lenders, acquire equity stakes in the business.

After the two-week exclusive period granted to Orchid has passed on the remaining leases it is thought that PwC will appoint an agent to market the properties.

Orchid was formed when Punch sold 290 Spirit sites to GI Partners for £571m 2006.