East Anglia: Punch Taverns seeks talks over debts as profits fall

PUBS group Punch Taverns said today it was planning talks with bondholders over restructuring its �2.1billion of debt as it posted a near-16% fall in annual profits.

Punch, which has more than 4,500 leased pubs, including about 150 in East Anglia where it owns many former Tolly Cobbold properties, reported a pre-tax profit of �64million for the 52 weeks to August 18, down from �76m the previous year.

Revenues fell by 6% on an underlying basis and from �607.2m to �491.7m overall, largely reflecting the disposal of 475 pubs during the year which, together with the sale of other assets, raised �130m, �1m ahead of book value.

The group’s core estate of 2,934 leasehold pubs – those which it plans to continue trading beyond completion of its continuing disposal programme – saw a 3.7% decline in net income over the year, which it said reflect the wettest April to June period since records began.

“We have delivered profits for the year in line with our expectations and are on track with our disposal programme in extracting maximum value from our non-core assets,” said chief executive Roger Whiteside.

However, Punch, which last year demerged its more strongly performing managed pubs business, Spirit, to cut its debt pile which then stood at around �3bn, said the cost of servicing its remaining debt was not sustainable and that, following a review of its capital structure, it had “initiated discussions with certain major shareholders and certain other stakeholders”.

It added: “While the options are complex and will take time to conclude we are confident that a consensual restructuring can be successfully implemented in a manner that delivers value for stakeholders.”