Yesterday (Tuesday 3 June), Punch Pubs & Co. announced it had secured a £640m debt refinancing package to support its long-term growth plans and pay outstanding borrowings, fees and expenses in connection with the offer.
Punch, which operates some 1,264 venues and is backed by Fortress Group, increased the bond from £600m and extended its financing repayment from 2026 to December 2030.
Financial pressures
The pubco was reportedly pleased with the deal, as the bond was more than two-times over-subscribed, which it felt highlighted the attractive nature of the business to investors.
However, financial advisory firm Begbies Traynor said the deal highlighted the extent of the financial pressures faced by the sector.
Commenting on Punch Pubs’ refinancing, Begbies Traynor partner Julie Palmer told The Morning Advertiser (The MA): “Punch Pubs’ refinancing highlights the extent of the financial pressures currently weighing on the hospitality sector. The refinancing comes at a time when one in three hospitality businesses are loss-making, and six in ten have been forced to cut jobs to stay afloat.
“In the wake of rising costs from increases in National Insurance contributions and the National Living Wage, Punch is rightly looking to give itself all the breathing room it can in such a challenging environment.
“Given a large proportion of the proceeds will be used to cover other borrowings, the likelihood is though that Punch will remain under pressure however much trading momentum it enjoys.
Cautiously optimistic
“While the refinancing suggests that lenders are cautiously optimistic about the sector’s long-term prospects, it is evident that hospitality businesses are still walking a tightrope.
“Punch itself might be able to make further borrowing work in its favour, but for many others the difficult operating conditions will be a challenge too much.”
Punch, which is led by CEO Andy Spencer, said it expected a £100m boost this financial year in its trading update last month.
The pubco reported total revenue for the 28 weeks to 23 February 2025 of £168.3m, up from £165.1m in 2024, with a a net cash inflow of £44m (prior year 28 weeks: £43.3m).
In addition, underlying EBITDA for the period stood at £46.9m (2024: £43.2m), with all three of its divisions (Leased and Tenanted, Management Partnership and Laine) in growth. Total EBITDA was £45.9m.
