Collyer: Punch has raised circa £220m from pub sales

A City analyst has estimated that Punch Taverns has raised around £220m from disposing of 298 pubs so far this year.

Geof Collyer, of Deutsche Bank, said: "Along with the recent increase in share capital, the group's finances are in much better shape and it has certainty over the repayment deadline for the convertible bond in 2010.

"We believe that there could be more sales to come, but after refinancing, the window of opportunity for some to buy maybe a finite one. "Based on reported data, it looks like Punch is selling assets for around 8x EBITDA. The price versus book value has varied somewhat depending upon the transaction, although it should be remembered that Punch wrote down 500 tenanted and leased pubs by 50% at the end of the last financial year, on a "priced to go" basis. "We have assumed, unless stated, that pubs sold to pub companies, regional brewers or restaurant groups are based on £750,000 per tenancy / lease and £1,250,000 per managed pub,

"Punch is in discussions with around 1,000 licensees about the sale of pubs to sitting tenants, and, when it last commented, it expected to deal on 200-300, although only 25 had completed so far. "We have assumed that those were sold for £250,000 each. "We also assume that these pubs are from the 1,250 sites identified as probable disposals by the new divisional managing director. "In our view, Punch needs to minimise the dilution from its disposals and capital raising by retiring a lot of debt below par.

"On top of that, we feel that the group needs to make progress in each of its operating divisions, relative to their peers, for equity investors to get fully turned back on to the stock. The performances from some of these peers this week may not necessarily help this process."