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Punch outlines share dilution survival plan

A HUGE DILUTION of current share capital is the best way for Punch Taverns to restructure and avoid a debt default in the future, according to its executive chairman.

The pubs business, which has spent many months trying to restructure its debt, has put forward a plan that will wipe hundreds of millions of pounds off what it owes.

It plans to reduce its £2.26bn debt by £600m, at an EBITDA leverage ratio of 7.7x, but will leave bondholders with 85% of the company. Punch requires three-quarters of shareholders and debtholders to agree the deal, stating it had support from 65% of the lenders and 54% of shareholders.

Punch, which once ran 10,000 pubs, is looking to reduce its portfolio of 4,000 by a further 1,000.

Stephen Billingham, executive chairman of Punch Taverns plc, said the deal would provide “stability” for the business.

“The benefits of approving the restructuring are clear and of benefit to all stakeholders. It is of critical importance that shareholders and noteholders vote in favour of the resolutions in order to implement the restructuring and avoid the adverse consequences for the group of the restructuring not proceeding,” said Billingham in a statement to the London Stock Exchange.

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