TIDMPUB
RNS Number : 3353P
Punch Taverns PLC
18 August 2014
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
PUNCH TAVERNS PLC
("Punch" or the "Group")
Launch of the proposed restructuring of the Punch A and Punch B
Securitisations
Overview
-- Punch announces the full terms of restructuring proposals
(the "Proposals") which represent the completion of an extensive
period of engagement and negotiation with stakeholders.
-- The terms of the Proposals are broadly similar to those
announced on 26 June 2014.
-- The Board of Punch is unanimously recommending that
shareholders vote in favour of resolutions approving the
Proposals.
-- The Proposals have the support of a broad range of
stakeholders that in aggregate own or control c. 65% of the notes
across Punch A and Punch B and c. 54% of the equity share capital
of Punch. These stakeholders comprise the ABI Special Committee
together with a number of investment funds managed or advised by
Alchemy Special Opportunities LLP, Alchemy Special Opportunities
(Guernsey) Limited, Avenue Europe International Management, L.P.,
Angelo, Gordon & Co. L.P., AG Funds, L.P., Bluecrest Capital
Management (New York), L.P., Glenview Capital Management LLC, Luxor
Capital Group, LP, Moore Capital Management, L.P., Oaktree Capital
Management, L.P., Seer Capital Management LP, Serengeti Asset
Management, L.P., and Warwick Capital Partners LLP. Ambac (the
monoline insurer for the Punch A securitisation) has also agreed to
support the Proposals.
-- Implementation of the Proposals is conditional upon the
approval of shareholders, all classes of noteholders in Punch A and
Punch B and certain other securitisation creditors. In particular,
the Proposals will also require the support of The Royal Bank of
Scotland plc (a liquidity facility provider to the Punch A and
Punch B securitisations and provider of hedging arrangements to the
Punch A securitisation), Lloyds Bank plc (a liquidity facility
provider to the Punch A securitisation), Citibank N.A., London
Branch (the provider of hedging arrangements to the Punch B
securitisation) and MBIA UK Insurance Limited (the monoline insurer
for the Punch B securitisation) each of whose approval is required
to implement the Proposals. Punch has had detailed discussions with
these stakeholders over an extended period and will continue the
process of securing their support for the Proposals on the basis
launched today.
-- The Proposals have been launched within the 10 business day
cure period for the 11 August 2014 milestone set out in the Punch A
and Punch B covenant waivers, which were approved on 18 July 2014.
However, failure to obtain approval for the Proposals from
shareholders, noteholders and these other securitisation creditors
is expected to lead to near-term default in the Punch A and Punch B
securitisations. Both the Punch A and Punch B securitisations would
be in default without the benefit of the current covenant waivers,
which are conditional upon a restructuring having been approved by
all necessary parties by 14 October 2014 (subject to a cure
period).
Impact of the Proposals
The Group's existing debt structure is unsustainable, with total
net debt leverage of 10.8[1] times EBITDA. Leverage would be
expected to increase following a default, absent a restructuring,
and this would be expected to have material adverse consequences
for all stakeholders and, in particular, for shareholders, given
the various financial and contractual linkages between the
securitisations and the rest of the Punch Group.
The Board believes that the Proposals will create a more robust
and sustainable debt structure for the Punch Group, with the
reduction of total net debt (including the mark-to-market on
interest rate swaps) by GBP0.6 billion, and the consolidated net
debt to EBITDA leverage ratio of the Punch Group falling to c.
7.7x[2]. Gross securitisation debt[3] of GBP1,585 million at
closing will have an initial effective interest rate of c. 7.8%
including PIK interest (c. 7.1% cash pay interest).
In consideration for the debt reduction, the debt-for-equity
swap and firm placing contemplated by the Proposals would result in
significant equity dilution for existing shareholders, such that
Punch's currently issued share capital would represent 15% of its
total enlarged issued share capital following the implementation of
the Proposals.
Board's consideration of the Proposals
The Board has carefully considered, with its advisers, the
Proposals and the resulting significant equity dilution. It
believes that it has considered all feasible alternatives to the
Proposals and it has sought to minimise the level of equity
dilution for shareholders. Given the broad level of stakeholder
support for the Proposals, the absence of sufficient support for
alternatives and the prospect of near-term default in the
securitisations absent a restructuring, the Board believes that the
Proposals are in the interests of all shareholders and deliver a
materially better position than the alternative of a default. The
Board is therefore unanimously recommending that shareholders vote
in favour of resolutions approving the Proposals.
Timetable and further information
Punch will shortly issue a combined circular and prospectus to
its shareholders, setting out details of the Proposals and
convening a general meeting for 17 September 2014 at which the
requisite resolutions to approve the Proposals will be put to
shareholders. Punch is also issuing documents convening meetings of
each class of noteholders in Punch A and Punch B for 17 September
2014 to approve the Proposals.
If all requisite shareholder, noteholder and other creditor
approvals are obtained, the Proposals are expected to become
effective, and dealings in the New Ordinary Shares are expected to
commence, on 8 October 2014.
This summary should be read in conjunction with the further
details of the Proposals (which includes information on current
trading) which are set out below.
Stephen Billingham, Executive Chairman of Punch Taverns plc,
commented:
"Today we launch the Punch restructuring, reflecting agreement
across multiple stakeholder groups.
The Board believes that the restructuring will create a more
robust balance sheet which will provide stability for the business,
provide a firm base to allow Punch to build on recent improvements
in trading and lead to further deleveraging.
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."
18 August 2014
Enquiries:
Punch Taverns plc Tel: 01283 501 948
Stephen Billingham, Executive
Chairman
Steve Dando, Finance Director
Media: Brunswick Tel: 020 7404 5959
Jonathan Glass, Mike Smith
Forward-looking statements
This announcement includes "forward-looking information" within
the meaning of Section 27A of the Securities Act, and Section 21E
of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical fact are, or may be deemed to
be, forward-looking statements. These forward-looking statements
are not based on historical facts, but rather reflect Punch's
current expectations concerning future results and events and
generally may be identified by the use of forward-looking words or
phrases such as "believe", "aim", "expect", "anticipate", "intend",
"foresee", "forecast", "likely", "should", "planned", "may",
"estimated", "potential" or other similar words and phrases.
Similarly, statements that describe Punch's objectives, plans or
goals are or may be forward-looking statements.
These forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause Punch's
actual results, performance or achievements to differ materially
from the anticipated results, performance or achievements expressed
or implied by these forward-looking statements. Although Punch
believes that the expectations reflected in these forward-looking
statements are reasonable, no assurance can be given that such
expectations will prove to have been correct.
Disclaimer
This announcement is not intended to and does not constitute or
form part of any offer to sell or invitation to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any
securities or the solicitation of any vote or approval in any
jurisdiction pursuant to the proposals set out herein or otherwise,
nor shall it (or the fact of its distribution) form the basis of,
or be relied on in connection with, any contract therefor or be
considered a recommendation that any investor should subscribe for
or purchase or invest in any securities.
The securities referred to herein have not been and will not be
registered under the U.S. Securities Act of 1933 as amended (the
"Securities Act") or under any U.S. state securities laws and may
not be offered or sold within the United States unless any such
securities are registered under the Securities Act or an exemption
from the registration requirements of the Securities Act and any
applicable state laws is available.
Goldman Sachs International, which is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority in the
United Kingdom, is acting as financial adviser to Punch and for no
one else in connection with the capital restructuring and will not
be responsible to anyone other than Punch for providing the
protections afforded to clients of Goldman Sachs International nor
for providing advice in connection with the capital restructuring,
the content of this announcement or any matter referred to
herein.
The Blackstone Group International Partners LLP, which is
authorised and regulated by the Financial Conduct Authority in the
United Kingdom, is acting as financial adviser to Punch and for no
one else in connection with the capital restructuring and will not
be responsible to anyone other than Punch for providing the
protections afforded to clients of The Blackstone Group
International Partners LLP nor for providing advice in connection
with the capital restructuring, the content of this announcement or
any matter referred to herein.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
PUNCH TAVERNS PLC
("Punch" or the "Company")
Recommended proposals relating to the restructuring of the Punch
A and Punch B Securitisations
1. Introduction
Punch today announces the full terms of restructuring proposals
for the Punch A Securitisation and the Punch B Securitisation which
represent the completion of an extensive period of engagement and
negotiation with stakeholders.
The proposals comprise:
-- a Restructuring of the Securitisations including, in
particular, the exchange of junior Notes for a combination of new
junior Notes, cash and New Ordinary Shares;
-- a Firm Placing of 1,273,005,000 New Ordinary Shares in
aggregate, to be allocated between the seven Funds (Alchemy,
Angelo, Gordon & Co., Avenue, Luxor, Glenview, Oaktree and
Warwick); and
-- a 1 for 20 share consolidation (the "Share Consolidation").
The terms of the proposals are broadly similar to those
announced on 26 June 2014.
In order for the proposals to be implemented, it is necessary
that:
-- the resolutions required to implement the Restructuring and
Firm Placing are approved by shareholders at a general meeting to
be held on 17 September 2014;
-- the resolutions required to implement the Restructuring are
approved by each class of Noteholders at meetings to be held on 17
September 2014; and
-- the consent of certain other securitisation creditors is obtained.
Capitalised terms used in this announcement are defined at the
end of this announcement.
2. Background to, and reasons for, the proposals
On 24 October 2012, Punch announced that it had completed a
detailed review of the capital structure of the Securitisations and
that it had concluded that both Securitisations were over-leveraged
and unsustainable in their current form and that a Restructuring of
both Securitisations was necessary.
Since that date, the Board has considered, with its advisers,
the options available and has entered into discussions with certain
of the Group's stakeholders to agree the terms of a consensual
restructuring. A consensual restructuring is required to avoid a
default in the Securitisations, which would be expected to have
material adverse consequences for all stakeholders and, in
particular, for shareholders.
As part of the capital structure review, and following the
announcement of its conclusions in October 2012, the Board engaged
in detailed discussions with a broad range of the Group's key
stakeholders, including shareholders and Noteholders and their
respective advisers, to seek their input on the range of options
under consideration to optimise the capital structure. The
objective of these discussions was to reach agreement on the terms
of a consensual restructuring for both Securitisations that would
create a sustainable capital structure for the Group.
This process of engagement with stakeholders has been extensive.
A number of different options have been examined in detail,
including four sets of proposals publicly announced on 7 February
2013, 10 June 2013, 9 December 2013 and 15 January 2014
respectively. The Board considered that each of these publicly
announced proposals was in the best interests of all stakeholders
and would deliver material benefits to them, in particular creating
a robust and sustainable debt structure, preserving the group
structure, and delivering a materially better position for all
stakeholders than default. However, given the nature of the
Securitisations and the differing interests across many stakeholder
classes, and, as a result, the competing demands placed on finite
cash resources and sources of value available to the Group, the
process of obtaining broad stakeholder support around a consensual
restructuring has been difficult and has required significant
time.
The proposals announced on 15 January 2014 contemplated
stakeholders agreeing to some or all of the following measures: (i)
a modification of the financial and operating covenants governing
the Securitisations; (ii) partially releasing claims in respect of,
or extension of the due date for payment on, existing Notes; and
(iii) exchange of existing Notes for a combination of (a) cash and
(b) new debt securities issued by the relevant Securitisation.
These proposals did not contemplate the issuance of any equity
securities, either by Punch or by the Securitisations. Punch
received a range of feedback from stakeholders in response to these
proposals, in light of which it concluded that a further period of
engagement would be required to reach agreement on the terms of a
consensual restructuring, and these proposals were withdrawn.
More recently, in order to provide a stable footing for
discussions on the terms of a consensual restructuring, the
Borrowers sought and obtained from Noteholders on 13 May 2014 a
temporary waiver of certain covenants governing the
Securitisations. On 27 May 2014, short-form term sheets were
published containing details of the restructuring terms proposed by
a group of stakeholders in the Securitisations. Following the
publication of these terms, Punch continued to negotiate with a
wider group of creditors and other stakeholders in order to
finalise long-form term sheets containing significantly more
detailed terms of the restructuring contemplated in the proposals.
A further covenant waiver was sought and obtained from Noteholders
on 18 July 2014 to ensure adequate time for final negotiations and
to agree the transaction documentation for the consensual
restructuring outlined in the proposals.
The proposals summarised in this announcement represent the
conclusion of this process over several months of negotiations
across the broad range of stakeholders.
The Restructuring and Firm Placing are combined,
inter-conditional proposals and the Board believes that they
deliver material benefits to all stakeholders, including
shareholders.
Specifically, the Restructuring and Firm Placing will, if
implemented, have the following effects:
-- create a more robust and sustainable debt structure:
o consolidated net debt (including the mark-to-market on
interest rate swaps) for the Group will be reduced by approximately
GBP0.6 billion;
o the consolidated net debt to EBITDA ratio of the Group will
improve to approximately 7.7x[4];
o gross securitisation debt[5] of GBP1,585 million immediately
following and as a result of the Restructuring and Firm Placing
will have an initial effective interest rate of approximately 7.8
per cent., including PIK interest (approximately 7.1 per cent.
excluding PIK interest);
o cash debt service (cash interest payable and scheduled
amortisation of principle) will be reduced by approximately GBP94
million for the first four quarters following the Closing Date
(being the date on which the Restructuring, Firm Placing and Share
Consolidation complete); and
o the next expected refinancing for both Securitisations is not
anticipated to be until 2021;
-- preserve the benefits of the Group structure for all
stakeholders: both Securitisations will continue to benefit from
the material financial and operational synergies, estimated at
GBP25 million per year, which are available to them by virtue of
being part of the wider Group; and
-- deliver a materially better position than the alternative of
default: the Board believes that the Securitisations' gross debt to
EBITDA ratio would be approximately 4x lower by 2018 than under a
scenario in which the Restructuring and Firm Placing are not
implemented.
The Restructuring and Firm Placing have the support of a broad
range of stakeholders that in aggregate own or control c. 56 per
cent. of the senior classes of Notes and c. 73 per cent. of the
junior classes of Notes across both Securitisations, and c. 54 per
cent. of the equity share capital of Punch. These stakeholders
include the ABI Special Committee, the Funds (being Alchemy,
Angelo, Gordon & Co., Avenue, Luxor, Glenview, Oaktree and
Warwick) and funds advised or managed by Seer Capital Management
LP. Ambac (the monoline insurer for the Punch A Securitisation) has
also agreed to support the Restructuring.
The Funds have informed Punch that they have entered into an
agreement with funds managed or advised by Serengeti Asset
Management, L.P., Moore Capital Management, L.P. and Bluecrest
Capital Management (New York), L.P. (being holders of, in
aggregate, 1 per cent. of the senior classes of Notes and 10 per
cent. of the junior classes of Notes across both Securitisations),
under which those funds have agreed to support the Restructuring
and Firm Placing. (These holdings are included in the percentages
referred to in the preceding paragraph.)
In order for the Restructuring and Firm Placing to be
implemented, it is necessary that:
-- the resolutions to approve the Restructuring and the Firm
Placing are passed by Punch's shareholders at the General Meeting.
The shareholder resolutions require at least 75 per cent. of the
votes cast to be in favour;
-- the resolutions to approve the Restructuring are passed by
each class of Noteholders at the Noteholder Meetings. The
Noteholder resolutions require at least 75 per cent. of the votes
cast at each Noteholder Meeting to be in favour; and
-- the consent of certain other securitisation creditors is
obtained. In particular, the proposals will also require the
support of each of The Royal Bank of Scotland plc (a liquidity
facility provider to the Punch A and Punch B securitisations and
provider of hedging arrangements to the Punch A securitisation),
Lloyds Bank plc (a liquidity facility provider to the Punch A
securitisation), Citibank N.A., London Branch (the provider of
hedging arrangements to the Punch B securitisation) and MBIA UK
Insurance Limited (the monoline insurer for the Punch B
securitisation). Punch has had detailed discussions with these
stakeholders over an extended period and will continue the process
of securing their support for the proposals on the basis launched
today.
Failure to obtain approval for the Restructuring and Firm
Placing from shareholders, Noteholders and these other creditors
would be expected to lead to near-term default in both
Securitisations. Both Securitisations would be in default without
the benefit of the current covenant waivers, which are conditional
upon a restructuring having been approved by all necessary parties
by 14 October 2014 (subject to a 10 business day cure period).
If shareholders and Noteholders do not approve the resolutions
necessary to implement the Restructuring and the Firm Placing, or
if the other required creditor consents have not been obtained, in
each case by 14 October 2014, then, without a further waiver
extension (which would be challenging to obtain in the time
available), an event of default would be expected to occur in both
Securitisations by no later than 28 October 2014.
While the potential implications of a default cannot be
predicted with certainty, any default is likely to have material
adverse consequences for all stakeholders, but particularly for
shareholders, given the various financial and contractual linkages
between the Securitisations and the rest of the Group.
3. The Restructuring
As at 21 June 2014, there was outstanding GBP1,408 million of
gross debt in respect of the Punch A Securitisation and GBP853
million of gross debt in respect of the Punch B Securitisation.
The principle changes that will be made to the Securitisations
are set out below.
Punch A Securitisation
25 per cent. of the outstanding fixed rate senior Notes (the
Class A1(R) Notes and Class A2(R) Notes) issued by the Punch A
Securitisation will each be extinguished in exchange for two
classes of new fixed rate senior Notes (the Class A1(V) Notes and
the Class A2(V) Notes, respectively), which will be repaid in
bullet repayments on maturity in October 2026 and October 2025,
respectively (to the extent they are not prepaid sooner under
mandatory prepayment terms requiring excess cash generated by the
Punch A Securitisation to be deposited on each Financial Quarter
Date into segregated accounts, to be applied variously towards
payments of any shortfall in funds available to pay senior debt
service and towards prepayments (including amounts ranking in
priority thereto) on the Super Senior Hedge Notes, and thereafter
the Class A1(V) Notes and Class A2(V) Notes pari passu and pro
rata).
The remaining 75 per cent. of the outstanding fixed rate senior
Notes (the Class A1(R) Notes and Class A2(R) Notes) will each be
redesignated as fixed amortisation Notes (the Class A1(F) Notes and
the Class A2(F) Notes, respectively) with a final maturity date of
October 2026 and October 2025, respectively, and a fixed
amortisation schedule (which may be paid out of excess cash from
the Punch A Securitisation only after prepayment in full of the
Super Senior Hedge Notes and the Class A1(V) Notes and Class A2(V)
Notes).
All of the outstanding junior Notes (the Class M1 Notes, Class
M2(N) Notes, Class B1 Notes, Class B2 Notes, Class B3 Notes, Class
C(R) Notes and the Class D1 Notes) issued by the Punch A
Securitisation will be exchanged, at a specified percentage of
their face amount, for a combination of one or more of: (i) cash;
(ii) new junior Notes (the Class M3 Notes and Class B4 Notes)
issued by Punch Taverns Finance plc (the "Note Issuer"), having
different maturities and different rates of interest; and (iii) New
Ordinary Shares in Punch. The precise combination of cash, new
junior Notes and New Ordinary Shares to be received by the existing
Noteholders of the Punch A Securitisation will depend on the class
and ranking of their existing Notes as set out below. Where holders
of certain junior Notes are entitled to receive New Ordinary Shares
in Punch, the relevant Class M1 Notes, Class B1 Notes, Class B2
Notes and Class C(R) Notes (as applicable) shall be acquired by the
Borrower in consideration for the procurement by the Borrower of
the issuance of such New Ordinary Shares to the relevant
Noteholder.
Percentage of Principal
Amount Outstanding
Class of Notes Payable in the Exchange Cash Class M3 Notes Class B4 Notes New Ordinary Shares
(as a percentage of the consideration payable for the exchange)
Class M1 Notes: 99.0 22.5 45.7 12.2 19.5
Class M2(N) Notes: 89.0 40.5 45.2 14.3 -
Class B1 Notes: 62.5 22.4 45.1 12.0 20.5
Class B2 Notes: 62.5 22.4 45.1 12.0 20.5
Class B3 Notes: 57.5 40.6 45.1 14.3 -
Class C(R) Notes: 34.0 18.7 37.6 10.0 33.8
Class D1 Notes: 11.6 40.1 45.5 14.4 -
The new Class M3 Notes issued by the Punch A Securitisation will
have a maturity date of October 2027, a floating interest rate and
no requirement to pay scheduled amortisation, and may be prepaid in
whole or in part only after two years from the Closing Date and
after the prepayment in full of the Super Senior Hedge Notes and
the Class A Notes.
The new Class B4 Notes issued by the Punch A Securitisation will
have a maturity date of October 2028 and will have both a cash
coupon (of 1.5 per cent. per annum) and a PIK coupon (of 13.50 per
cent. per annum, calculated by reference to a compounding formula),
rising to 15.0 per cent. per annum if a default stop notice is
issued. The Class B4 Notes may be prepaid in whole or in part only
after two years from the Closing Date and after the prepayment in
full of the Super Senior Hedge Notes, the Class A Notes and the
Class M3 Notes.
The Super Senior Hedge Notes, the Class A Notes and the Class M3
Notes will have the benefit of security over the Note Issuer's
assets and undertaking as well as a new first-ranking fixed charge
over shares in Punch Taverns Holdings Limited and a first-ranking
floating charge over the assets and undertaking of a newly
incorporated holding company of Punch Taverns Holdings Limited
("Punch A New Holdco 1"). The Class B4 Notes will not benefit from
any security over the Note Issuer's assets and undertaking but will
benefit from a new first-ranking fixed charge over shares in Punch
A New Holdco 1 and a first-ranking floating charge over the assets
and undertaking of a newly incorporated holding company ("Punch A
New Holdco 2") which will own the shares in Punch A New Holdco
1.
The monoline financial guarantees provided by Ambac for the
Punch A Securitisation will be released as part of the
Restructuring and Ambac will rebate GBP20 million to the Note
Issuer, which will in turn pay this sum on to the Borrower. The
Note Issuer will pay GBP2.1 million to Ambac in recognition of
foregone additional guarantee fees and Punch will also pay
GBP250,000 to Ambac on each of the first and second anniversary of
the Closing Date in recognition of foregone additional guarantee
fees. Ambac has entered into an escrow arrangement with Punch and
with Deutsche Bank AG, London Branch (as escrow agent). The amount
becoming due from Ambac on completion of the Restructuring has been
paid by it into an escrow account, pending the Closing Date.
The existing interest rate swap transaction relating to the
Class M2(N) Notes, the Class B3 Notes and the Class D1 Notes will
be partially terminated such that the remaining portion hedges the
Class M3 Notes, with all sums due to the hedge provider as a result
of such partial termination being set off against the amount
advanced by the hedge provider under the Super Senior Hedge Notes.
The Super Senior Hedge Notes will mature in July 2021, will bear
interest, will be listed, will rank in priority of payment behind
the existing hedges and will have no requirement to pay scheduled
amortisation, but instead will be required to be prepaid out of
excess cash generated by the Punch A Securitisation, with the
amount of interest payable on the Super Senior Hedge Notes being
determined by reference to the rate of prepayment (measured against
a target amortisation profile).
The liquidity facility has been calculated to cover 18 months'
peak interest on the Super Senior Hedge Notes, 18 months' peak
interest and scheduled redemption (excluding the final payment at
maturity) of the Class A1(F) Notes and Class A2(F) Notes, 18
months' peak interest on the Class A1(V) Notes and Class A2(V)
Notes and 18 months' peak interest on the Class M3 Notes (with a
sub-limit applicable to interest payments on the Class M3 Notes).
The precise amount of: (i) the total commitments; and (ii) the M3
sub-limit will be calculated at the Closing Date but are expected,
as at the latest practicable date of calculation, to be GBP135.1
million and GBP39.6 million, respectively.
The operational covenants of the Punch A Securitisation will be
amended to: (i) remove certain restrictions on the disposals of
pubs in the Punch A Non-Core Estate and to allow disposals of up to
4 per cent. annually (to be tested by reference to the trailing
24-month EBITDA of pubs in the Punch A Core Estate in any financial
year (excluding non-trading periods and making adjustments in
respect of EBITDA generated by pubs let on tenancies at will for
more than 12 months in such period) (the "Trading Outlet EBITDA"))
and up to 20 per cent. cumulatively of pubs in the Punch A Core
Estate (to be tested on the same basis); (ii) amend the minimum
CapEx amount from GBP1,000 per financial year multiplied by the
number of all pubs forming part of the Punch A Estate to GBP8,000
per pub in the Punch A Core Estate per annum (increasing annually
in line with a recognised price index); (iii) introduce a maximum
CapEx amount of GBP17,500 per pub in the Punch A Core Estate per
annum (increasing annually in line with a recognised price index);
(iv) allow the payment to the Group (including by way of repayment
of subordinated debt owed by the Borrower to the Group) of an
amount equal to 2 per cent. of annual EBTIDA on satisfaction of
certain conditions; (v) allow the appointment of a board observer
and the appointment, replacement or removal of board members
(subject to certain leverage tests) appointed by the Security
Trustee, acting on the instructions of the requisite percentage of
Noteholders, in respect of the boards of the Note Issuer and the
Borrower; (vi) restrict distributions (including dividends) from
the Punch A Securitisation to the rest of the Group other than the
payments noted in (iv); (vii) restrict acquisitions other than
those funded with the proceeds of a fully subordinated debt and/or
an equity contribution and with the approval of not less than 50
per cent. of each class of Notes then outstanding; and (viii)
restricting the issue of additional Notes by the Note Issuer other
than in order to refinance existing Notes (subject to certain
conditions).
In addition, the following financial covenants of the Punch A
Securitisation will be amended as summarised in the table
below:
Before Restructuring After Restructuring
DSCR (ratio of EBITDA to Debt Service) Not less than 1.25:1 None
EBITDA to Interest Charges None Not less than X:1.0 where X shall be 1.25 at
the Closing Date but shall increase each
Financial
Quarter Date to 1.70:1.0 by August 2022 and
will stay at 1.70 each Financial Quarter Date
thereafter
Free Cash Flow to Debt Service None Not less than 1.0:1.0
Net Senior Debt to EBITDA None Not greater than the higher of (i) 3.0:1.0
and (ii) X:1 where X shall be 5.30 for the
relevant
period ending in March 2015 and shall
decrease each Financial Quarter Date to 3.0
for the
relevant period ending in December 2019 and
shall stay at 3.0 each Financial Quarter Date
thereafter
Net Total Leverage (ratio of Net Total Debt None Not greater than the higher of (i) 4.5:1.0
(i.e. excluding any amounts in respect of the and (ii) X:1 where X shall be 9.0 for the
B4 advances) to EBITDA) relevant
period ending in March 2015 and shall
decrease each Financial Quarter Date to 4.50
for the
relevant period ending December 2023 and
shall stay at 4.50 each Financial Quarter
Date thereafter
Minimum net worth GBP200 million GBP50 million
Punch B Securitisation
The terms of certain existing senior Notes (the Class A3 Notes,
Class A6 Notes and the Class A7 Notes) issued by the Punch B
Securitisation will be amended with maturity dates of September
2021, September 2022 and March 2024 respectively, a fixed
amortisation profile and with mandatory prepayment terms requiring
excess cash generated by the Punch B Securitisation to be deposited
on each Financial Quarter Date into segregated accounts to be
applied variously towards payments of any shortfall in funds
available to pay senior debt service and towards prepayment
(including any amounts ranking in priority thereto) of the Super
Senior Swap Loan, and thereafter, prepayment of the Class A Notes
(beginning with the Class A3 Notes).
One class of the existing senior Notes (the Class A8 Notes) will
be prepaid in full in cash on the Closing Date.
All of the outstanding junior Notes (the Class B1 Notes, Class
B2 Notes and the Class C1 Notes) issued by the Punch B
Securitisation will be exchanged, at a specified percentage of the
principal amount outstanding, for a combination of one or more of:
(i) new junior Notes (the Class B3 Notes) issued by Punch Taverns
Finance B Limited; and (ii) New Ordinary Shares in the Company. The
precise combination of new junior Notes and New Ordinary Shares to
be received by the existing Noteholders of the Punch B
Securitisation will depend on the class and ranking of their
existing Notes as set out below:
Percentage of Principal Amount
Outstanding Payable in Exchange
Class of Notes (%) Class B3 Notes New Ordinary Shares
(as a percentage of the consideration for the exchange)
Class B1 Notes: 95 42.2 57.8
Class B2 Notes: 95 42.2 57.8
Class C1 Notes: 55 -- 100
The Funds (or funds affiliated with them) will, in addition,
subscribe for GBP8.4 million in principal amount of additional
Class B3 Notes to be issued for aggregate cash consideration of
GBP7.0 million (such additional Class B3 Notes to be allocated
among the Funds in proportion to their respective shareholdings in
Punch as at the Closing Date (as adjusted for the shares acquired
by them in the Restructuring, Firm Placing and the initial share
reallocation described in paragraph 4 below).
The new Class B3 Notes issued by the Punch B Securitisation will
have a maturity date of December 2025, a fixed interest rate, no
scheduled amortisation and may only be prepaid in whole or in part
only after two years from the Closing Date and after the prepayment
in full of the Super Senior Swap Loan and the Class A Notes.
All of the Class A Notes will have the benefit of security over
the Note Issuer's assets and undertaking as well as a new
first-ranking fixed charge over shares in Punch Taverns (PMH)
Limited and a first-ranking floating charge over the assets and
undertaking of a newly incorporated holding company of Punch
Taverns (PMH) Limited ("Punch B New Holdco 1"). The Class B3 Notes
will not benefit from any security over the Note Issuer's assets
and undertaking but will benefit from a new first-ranking fixed
charge over shares in Punch B New HoldCo 1, and a first-ranking
floating charge over the assets and undertaking of a newly
incorporated holding company which will own the shares in Punch B
New Holdco 1 ("Punch B New Holdco 2").
The monoline financial guarantees provided by MBIA for the Punch
B Securitisation will be released.
Existing hedging arrangements relating to the Class A8 Notes and
the Class C1 Notes will be terminated in full, with all sums due to
the hedge provider as a result of such termination being set off
against the amount advanced by the hedge provider under the Super
Senior Swap Loan. The Super Senior Swap Loan will bear interest,
have a fixed amortisation profile and will be required to be
prepaid out of excess cash, but will not have the benefit of any
further security or covenants beyond those already provided to the
hedge provider under the existing documentation.
The liquidity facility will be resized to cover 18 months of
peak interest and scheduled amortisation in respect of each of the
Super Senior Swap Loan and the Class A Notes excluding, in each
case, the final scheduled repayment of principal. The precise
amount of the total commitments will be calculated at the Closing
Date, but is expected as at the latest practicable date of
calculation to be GBP88.5 million.
The operational covenants of the Punch B Securitisation will be
amended to: (i) remove restrictions on the disposals of pubs in the
Punch B Non-Core Estate and to allow disposals of up to 4 per cent.
annually (to be tested by reference to the trailing 24-month EBITDA
of pubs in the Punch B Core Estate in any financial year (excluding
non-trading periods and making adjustments in respect of EBITDA
generated by pubs let on tenancies at will for more than 12 months
in such period) (the "Trading Outlet EBITDA")) and up to 20 per
cent. cumulatively of pubs in the Punch B Core Estate (to be tested
on the same basis); (ii) amend the minimum CapEx amount from GBP500
per half year multiplied by the number of all pubs forming part of
the Punch B Estate to GBP8,000 per pub in the Punch B Core Estate
per annum (increasing annually in line with a recognised price
index); (iii) introduce a maximum CapEx amount of GBP17,500 per pub
in the Punch B Core Estate per annum (increasing annually in line
with a recognised price index); (iv) allow the appointment of a
board observer appointed and the appointment, replacement or
removal of board members (subject to certain leverage tests)
appointed by the Security Trustee, acting on the instructions of
the requisite percentage of Noteholders, in respect of the boards
of the Note Issuer and the Borrower; (v) restrict distributions
(including dividends) from the Punch B Securitisation to the rest
of the Group; (vi) restrict acquisitions other than those funded
with the proceeds of a fully subordinated debt and/or an equity
contribution and with the approval of not less than 50 per cent. of
each class of Notes then outstanding; and (vii) restricting the
issue of additional Notes by the Note Issuer other than in order to
refinance existing Notes (subject to certain conditions).
In addition, the following financial covenants of the Punch B
Securitisation will be amended as set out in the table below:
Before Restructuring After Restructuring
DSCR (ratio of EBITDA to Debt Service) Not less than 1.25:1 None
EBITDA to Interest Charges None Not less than X:1.0 where X shall be 1.25 for the
relevant period ending in March 2015 and
shall increase each Financial Quarter Date to 1.70
for the relevant period ending in August
2022 and will stay at 1.70 each Financial Quarter
Date thereafter
Free Cash Flow to Debt Service Not less than 1.10:1.0 Not less than 1.0:1.0
Net Senior Debt to EBITDA None Not greater than the higher of (i) 6.0:1.0 and (ii)
X:1 where X shall be 8.60 for the relevant
period ending in March 2015 and shall decrease each
Financial Quarter Date to 6.00 for the
relevant period ending in December 2018 and will
stay at 6.0 each Financial Quarter Date thereafter
Minimum net worth GBP125 million GBP50 million
4. The Firm Placing
In connection with the Restructuring, Punch has entered into the
Subscription Agreement with the Funds, pursuant to which the Funds
have undertaken to subscribe for 1,273,005,000 New Ordinary Shares
in aggregate, at a cash subscription price of 3.93 pence per New
Ordinary Share, in order to raise GBP50.0 million (before estimated
attributable costs and expenses). This represents a discount of
58.7 per cent. to the closing middle market share price as at 14
August 2014.
The whole of the net proceeds of the Firm Placing (estimated to
be GBP49.8 million after the deduction of estimated total
attributable costs and expenses of approximately GBP230,000
(including irrecoverable VAT)) will be applied in and towards
payment of the cash consideration due to the holders of junior
Notes in the Restructuring of the Punch A Securitisation.
The New Ordinary Shares to be issued pursuant to the Firm
Placing will be allocated as follows:
Subscriber Number of New Ordinary Shares
Glenview 472,547,000
Avenue Europe 362,062,000
Luxor 253,942,000
Angelo, Gordon & Co 60,402,000
Oaktree 60,402,000
Alchemy 38,190,000
Warwick 25,460,000
Shortly after the Closing Date, the following Funds will
acquire, in aggregate, 25,814,418 New Ordinary Shares from Avenue
Europe at a price of 7.86 pence per New Ordinary Share (subject in
each case to the necessary adjustment for the Share Consolidation),
as follows:
Subscriber Number of New Ordinary Shares
Glenview 14,216,636
Luxor 7,856,562
Angelo, Gordon & Co 1,870,610
Oaktree Capital 1,870,610
The Funds have informed the Company that they have entered into
an agreement with funds advised by Serengeti Asset Management,
L.P., Moore Capital Management, L.P. and Bluecrest Capital
Management (New York) L.P. under which those holders have agreed
with the Funds to vote in favour of the Restructuring and Firm
Placing. Under the agreement, if the Restructuring is completed, a
total of 398,544,490 of the New Ordinary Shares to be issued to the
Funds pursuant to the Restructuring and Firm Placing will be
transferred to those holders in return for those holders paying a
certain amount in cash and transferring certain Class M3 Notes to
the Funds. As a result of these share transfers, Glenview will
dispose of 92,687,107 New Ordinary Shares and acquire GBP4,186,000
in principal amount of Class M3 Notes and Luxor will dispose of
75,727,826 New Ordinary Shares and acquire GBP3,420,000 in
principal amount of Class M3 Notes. The Company is not aware of the
terms of the transfer of the New Ordinary Shares or Class M3 Notes
under this agreement, or of any further transfers of New Ordinary
Shares and/or Notes to or by the Funds (or any other shareholders
or Noteholders) to any other party.
The New Ordinary Shares to be issued pursuant to the Firm
Placing will constitute 29 per cent. of Punch's enlarged issued
share capital.
No commissions are being paid to the Funds in connection with
the Firm Placing.
The Funds have entered into escrow arrangements with Punch and
with Deutsche Bank AG, London Branch (as escrow agent). The
aggregate subscription amount becoming due by the Funds on
completion of the Firm Placing has been paid by them into an escrow
account, pending the Closing Date. The Funds have also paid the
GBP7.0 million net amount due from them in respect of the purchase
of GBP8.4 million in principal amount of additional Class B3 Notes
into a separate escrow account on substantially similar terms.
5. Related party transactions
Glenview and Luxor, being two of the seven Funds participating
in the Restructuring and Firm Placing, each holds, directly or
indirectly, and as at 14 August 2014, more than 10 per cent. of the
issued share capital of the Company, and it is expected that each
will hold more than 10 per cent. of the issued share capital of the
Company immediately following the issue to them of New Ordinary
Shares pursuant to the Restructuring and the Firm Placing (assuming
that neither of them has since acquired or disposed of (or will,
before the New Ordinary Shares are issued pursuant to the
Restructuring and Firm Placing, acquire or dispose of) any Existing
Ordinary Shares or any existing Notes which carry an entitlement to
receive New Ordinary Shares in the Restructuring). Under the
Listing Rules, Glenview and Luxor are, therefore, related parties
in relation to the Company and, accordingly, their participation in
the Restructuring and Firm Placing is a "related party transaction"
which requires the approval of the other shareholders under the
Listing Rules.
On the basis of the assumption set out above, the tables below
set out the interests of Glenview and Luxor in the issued share
capital of the Company, and in the Notes issued by each
Securitisation, both before and after completion of the
Restructuring and Firm Placing, and include the effects of the
reallocation of New Ordinary Shares from Avenue Europe described in
paragraph 4 above and the disposal of New Ordinary Shares and
(where applicable) the acquisition of Class M3 Notes pursuant to
the agreement that the Funds have entered into with Serengeti Asset
Management, LP, Moore Capital Management, LP and Bluecrest Capital
Management (New York) LP. (The effect of the Share Consolidation is
not shown, as it will not affect the percentage of the issued share
capital of the Company held by them.)
Glenview
Before After
Number / amount Percentage Number / amount Percentage
Shares
Ordinary shares of 0.04786p each 121,030,371 18.2% 987,533,294 22.2%
Notes
Punch A existing notes
Class A1 2,260,000 0.8% -- --
Class A2 1,968,120 1.0% -- --
Class B2 3,276,000 3.9% -- --
Punch A new notes
Class A1(F) -- -- 1,695,000 0.8%
Class A1(V) -- -- 565,000 0.8%
Class A2(F) -- -- 1,476,090 1.1%
Class A2(V) -- -- 492,030 1.1%
Class M3 -- -- 5,109,000 1.7%
Class B4 -- -- 246,000 0.3%
Punch B existing notes
Class A7 6,543,700 4.2% 6,543,700 4.2%
Class B1 6,635,000 10.8% -- --
Class B2 21,902,000 22.0% -- --
Class C1 38,229,000 36.0% -- --
Punch B new notes
Class B3 -- -- 14,079,000 19.3%
Luxor
Before After
Number / amount Percentage Number / amount Percentage
Shares
Ordinary shares of 0.04786p each 76,440,027 11.5% 682,460,563 15.4%
Notes
Punch A existing notes
Class A2 1,855,920 1.0% -- --
Class B1 16,170,000 20.3% -- --
Class B2 3,372,000 4.0% -- --
Class D1 46,300,000 68.3% -- --
Punch A new notes
Class A2(F) -- -- 1,391,940 1.0%
Class A2(V) -- -- 463,980 1.0%
Class M3 -- -- 11,364,000 3.8%
Class B4 -- -- 2,241,000 2.5%
Punch B existing notes
Class A7 1,350,620 0.9% 1,350,620 0.9%
Class A8 12,208,629 28.0% -- --
Class B1 6,134,000 10.0% -- --
Class B2 21,402,000 21.5% -- --
Class C1 27,942,000 26.3% -- --
Punch B new notes
Class B3 -- -- 12,906,000 17.7%
Glenview and Luxor have undertaken not to vote at the General
Meeting (and to take all reasonable steps to ensure that their
associates do not vote) on the resolutions necessary to approve,
respectively, their own participation in the Restructuring and Firm
Placing as a related party transaction.
6. Effect of the Restructuring, Firm Placing and Share
Consolidation on existing shareholders
The New Ordinary Shares to be issued pursuant to the
Restructuring and the Firm Placing will constitute 85 per cent. of
the enlarged issued share capital of Punch. The holdings of
existing shareholders (not acquiring New Ordinary Shares in the
Restructuring or the Firm Placing) will, therefore, be
significantly diluted.
As a result of the issue of the New Ordinary Shares, it is
expected that Punch's "free float" (for the purposes of the Listing
Rules), will be reduced from approximately 35 per cent., as at 14
August 2014, to approximately 32.5 per cent. following the
Restructuring, Firm Placing and Share Consolidation. Punch has
secured certain limited undertakings from the Funds which are
intended to mitigate further adverse effects on its free float.
7. Current trading and full year guidance
Since the Group's trading update on 26 June 2014, which included
guidance in respect of underlying EBITDA, trading performance has
been in line with management expectations. Trading for the 48 weeks
to 19 July 2014 was good, with like-for-like net income in the Core
Estate up 1.3 per cent. (based on unaudited management information
for the 48 weeks to 19 July 2014). There has been growth in average
net income per pub across the Estate during this period. The Group
has realised its target of generating GBP100 million of proceeds
from pub disposals, having raised net proceeds of GBP103 million
over the 48 weeks to 19 July 2014.
Provided neither Securitisation defaults, the Board expects to
generate underlying EBITDA of between GBP201.0 million and GBP209.0
million in respect of the 53 week period ending 23 August 2014.
8. The Share Consolidation
Punch's share price has adjusted, and may further adjust, in
anticipation of the Restructuring and the Firm Placing, by reason
principally of: (i) the expected enlargement of Punch's issued
share capital pursuant to the Restructuring and the Firm Placing;
and (ii) the expected overall reduction in the Group's consolidated
net debt.
As at 14 August 2014, Punch's share price was 9.5 pence. The
Share Consolidation is being proposed in order to seek to restore
the share price to a level that the Board considers to be
appropriate. It is proposed to consolidate the Existing Ordinary
Shares (including the New Ordinary Shares to be issued pursuant to
the Restructuring and the Firm Placing) into Consolidated Ordinary
Shares, on the basis of 1 Consolidated Ordinary Share for every 20
Existing Ordinary Shares and New Ordinary Shares.
Immediately before the Share Consolidation becomes effective,
Punch will allot and issue up to 100 ordinary shares to the Company
Secretary for a subscription price equal to the closing middle
market price on the trading day before the date of allotment, in
order to ensure that the total number of ordinary shares
outstanding immediately before the Share Consolidation becomes
effective, divides exactly into the consolidation ratio referred to
above.
The Share Consolidation will become effective subject to and
immediately following the issue of the New Ordinary Shares pursuant
to the Restructuring and the Firm Placing.
Any fractional entitlements arising in respect of the Share
Consolidation will be aggregated and sold on behalf of the
shareholder entitled to them. The net proceeds (after payment of
expenses and any applicable taxes) will be remitted to the relevant
shareholder, unless that shareholder would be entitled to less than
GBP3.00, in which case the proceeds will be donated by Punch to the
Licensed Trade Charity, a registered charity, together with a
matching donation by Punch (capped at GBP5,000).
9. Importance of the vote and consequences if the Restructuring
and Firm Placing do not proceed
If shareholders and Noteholders do not approve the resolutions
necessary to implement the Restructuring and the Firm Placing, or
if certain other required stakeholder consents have not been
obtained, in each case by 14 October 2014, then, without a further
waiver extension (which would be challenging to obtain in the time
available), an event of default would be expected to occur in both
Securitisations by no later than 28 October 2014.
As explained in Punch's interim results announcement on 15 April
2014, the Securitisations had previously maintained compliance with
their DSCR covenants by way of financial support provided by the
wider Group through supply arrangements with the Securitisations,
or by purchasing outstanding Notes at a discount. However, in the
12 week period ended 7 December 2013, this support ceased and, from
that time, the Securitisations have also not repurchased any
outstanding Notes.
On 15 April 2014, Punch announced that the DSCR for the two
quarters ended 1 March 2014 had fallen below the 1.25x covenant
applicable to the Punch A Securitisation, and that although the
minimum DSCR covenant level of 1.25x applicable to the Punch B
Securitisation had been satisfied, it had reduced to 1.25x, from
1.52x at the previous test date.
On 13 May 2014, Punch announced that the requisite majority of
Noteholders and other relevant creditors had acceded to temporary
waiver requests in respect of both Securitisations in order to
facilitate a consensual Restructuring and delay a possible default.
On 26 June 2014, Punch announced that it had convened meetings of
Noteholders to be held on 18 July 2014 to approve a further
temporary waiver request. On 18 July 2014, the requisite majority
of Noteholders and other relevant creditors acceded to further
temporary waiver extensions, which will expire at the latest on 19
November 2014.
The occurrence of an event of default would be expected to
result in the appointment of an administrative receiver in relation
to some or all of the companies in the Group that have granted
security in relation to the relevant Securitisation (each an
"Obligor"). There can be no certainty as to the course of action an
administrative receiver would pursue, but possibilities could
include: proposing a restructuring of the Securitisations on
different terms; continuing to run the business for the benefit of
creditors; disposing of assets to make distributions to creditors
in accordance with the priority of their entitlements; or placing
the relevant Obligors into liquidation.
Other members of the Group (outside the Securitisations) have
certain financial linkages with the Obligors in respect of pension
liabilities, real estate liabilities (including guarantees of
leasehold liabilities), Group tax assets and tax liabilities, third
party indemnities (including to the monoline insurers (guarantors)
of certain classes of the Notes) and intercompany loans. If there
were to be a default of either Securitisation, certain claims may
arise against, and losses may be suffered by, these other members
of the Group. In particular, a default by the Punch B
Securitisation would be expected to crystallise some of these
linkages, including pension liabilities, which in certain
circumstances would have a priority claim against the assets of
these other Group companies. When combined with existing
Group-level liabilities (including external leasehold liabilities),
the crystallisation of such linkages following a default of the
Punch B Securitisation could generate aggregate liabilities at
Group level which could exceed the cash resources available to
discharge them. Management services and supply arrangements for the
Securitisations are provided or procured at Group level, giving
rise to substantial operating synergies that could be lost on
termination of these arrangements in the event of a default.
In these circumstances, and depending on the course of action
pursued by any administrative receiver, these other members of the
Group may be placed into administration shortly following the entry
of the Obligors into administrative receivership and it would not
be possible for dividends or other distributions to be made to
shareholders. In addition, Punch may not recover anything from the
Obligors, or from those other members of the Group.
The Board continues to believe that a consensual restructuring
is required to avoid a near-term default in the Securitisations,
which would be expected to have a material adverse consequences for
all stakeholders and, in particular, for shareholders given the
various financial and contractual linkages between the
Securitisations and the rest of the Group.
The Board has considered all feasible alternatives and has taken
a number of important factors into account. These include the
recent improvement in trading performance of the Core Estate,
progress towards disposal of the Non-Core Estate, the Group's
business strategy and operating outlook, the impact of financial
and contractual linkages across the Group, the potential
implications of a default in one or both of the Securitisations and
the absence of sufficient support for alternatives. All of these
factors have been critical in the Board's decision to recommend the
Restructuring, the Firm Placing and the Share Consolidation.
10. Recommendation
The Board considers that the Restructuring, the Firm Placing and
the Share Consolidation are in the best interests of shareholders
as a whole. The Board, which has been so advised by Goldman Sachs,
considers the terms on which Glenview and Luxor will participate in
the Restructuring and in the Firm Placing to be fair and reasonable
so far as shareholders are concerned.
Accordingly, the Board unanimously recommends that shareholders
vote in favour of the resolutions to be proposed at the general
meeting, as they intend to do in respect of their own beneficial
holdings of Existing Ordinary Shares, which as at 14 August 2014
amount to 1,140,892 Existing Ordinary Shares in aggregate,
representing approximately 0.172 per cent. of Punch's existing
issued share capital.
11. Expected timetable
The expected timetable for the Restructuring, Firm Placing and
Share Consolidation are set out below. If any of the times or dates
below change, Punch will give notice of the change by issuing an
announcement through a Regulatory Information Service. Details of
the revised times and/or dates will also be available on Punch's
website www.punchtavernsplc.com
Noteholder Meetings 17 September 2014
General Meeting 17 September 2014
Closing Date 8 October 2014
Forward-looking statements
This announcement includes "forward-looking information" within
the meaning of Section 27A of the Securities Act, and Section 21E
of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical fact are, or may be deemed to
be, forward-looking statements. These forward-looking statements
are not based on historical facts, but rather reflect Punch's
current expectations concerning future results and events and
generally may be identified by the use of forward-looking words or
phrases such as "believe", "aim", "expect", "anticipate", "intend",
"foresee", "forecast", "likely", "should", "planned", "may",
"estimated", "potential" or other similar words and phrases.
Similarly, statements that describe Punch's objectives, plans or
goals are or may be forward-looking statements.
These forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause Punch's
actual results, performance or achievements to differ materially
from the anticipated results, performance or achievements expressed
or implied by these forward-looking statements. Although Punch
believes that the expectations reflected in these forward-looking
statements are reasonable, no assurance can be given that such
expectations will prove to have been correct.
Disclaimer
This announcement is not intended to and does not constitute or
form part of any offer to sell or invitation to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any
securities or the solicitation of any vote or approval in any
jurisdiction pursuant to the proposals set out herein or otherwise,
nor shall it (or the fact of its distribution) form the basis of,
or be relied on in connection with, any contract therefor or be
considered a recommendation that any investor should subscribe for
or purchase or invest in any securities.
The securities referred to herein have not been and will not be
registered under the U.S. Securities Act of 1933 as amended (the
"Securities Act") or under any U.S. state securities laws and may
not be offered or sold within the United States unless any such
securities are registered under the Securities Act or an exemption
from the registration requirements of the Securities Act and any
applicable state laws is available.
Goldman Sachs International, which is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority in the
United Kingdom, is acting as financial adviser to Punch and for no
one else in connection with the capital restructuring and will not
be responsible to anyone other than Punch for providing the
protections afforded to clients of Goldman Sachs International nor
for providing advice in connection with the capital restructuring,
the content of this announcement or any matter referred to
herein.
The Blackstone Group International Partners LLP, which is
authorised and regulated by the Financial Conduct Authority in the
United Kingdom, is acting as financial adviser to Punch and for no
one else in connection with the capital restructuring and will not
be responsible to anyone other than Punch for providing the
protections afforded to clients of The Blackstone Group
International Partners LLP nor for providing advice in connection
with the capital restructuring, the content of this announcement or
any matter referred to herein.
Definitions
Ambac Ambac Assurance UK Limited;
Borrower either: (i) in the context of the Punch
A Securitisation, Punch Partnerships
(PTL) Limited (incorporated in England
and Wales with number 03512363); or
(ii) in the context of the Punch B
Securitisation, Punch Partnerships
(PML) Limited (incorporated in England
and Wales with company number 03321199);
Capex or CapEx capital expenditure in the repair,
renewal and maintenance of internal
and external fabric of the mortgaged
properties within the relevant Securitisation
and their fixtures and fittings (excluding
for the avoidance of doubt exceptional
items) and/or any enhancements to or
improvements in value of any mortgaged
properties within the relevant Securitisation;
Closing Date the date on which the Restructuring,
Firm Placing and Share Consolidation
are expected to complete and become
effective, which is currently expected
to be 8 October 2014;
Consolidated Ordinary the ordinary shares of the Company,
Shares each of 0.9572 pence par value, resulting
from the consolidation of the Existing
Ordinary Shares and New Ordinary Shares
pursuant to the Share Consolidation;
Core Estate the Group's core leased and tenanted
pubs, comprising 2,937 pubs as at 21
June 2014;
DSCR under the existing terms governing
the Securitisations, the ratio of EBITDA
to debt service as at each Financial
Quarter Date in respect of the preceding
two financial quarters and four financial
quarters;
Estate the Group's leased and tenanted pubs,
comprising 3,835 pubs as at 21 June
2014;
Existing Ordinary Shares the ordinary shares, each of 0.04786
pence par value, in existence prior
to the issue of the New Ordinary Shares
pursuant to the Restructuring and the
Firm Placing;
Firm Placing the allotment and issue by Punch of
1,273,005,000 New Ordinary Shares in
aggregate at 3.93 pence per share to
the Funds;
Funds investment funds (or subsidiaries of
such funds) managed or advised by:
(i) Alchemy Special Opportunities LLP
or Alchemy Special Opportunities (Guernsey)
Limited ("Alchemy"); (ii) Angelo, Gordon
& Co., L.P. or AG Funds, L.P. ("Angelo,
Gordon & Co."); (iii) Avenue Europe
International Management, L.P. ("Avenue");
(iv) Luxor Capital Group, LP ("Luxor");
(v) Glenview Capital Management LLC
("Glenview"); (vi) Oaktree Capital
Management, L.P. ("Oaktree"); and (vii)
Warwick Capital Partners LLP ("Warwick");
General Meeting the general meeting of the shareholders
of Punch convened for the purposes
of voting on the resolutions required
to approve the Restructuring, the Firm
Placing and the Share Consolidation;
Group Punch and all its subsidiaries;
New Ordinary Shares the new ordinary shares each of 0.04786
pence par value to be issued pursuant
to the Restructuring and/or the Firm
Placing and, following the Share Consolidation,
such shares as consolidated into ordinary
shares of 0.9572 pence par value;
Non-Core Estate the Group's non-core leased and tenanted
pubs, comprising 898 pubs as at 21
June 2014;
Note Issuer either: (i) in the context of the Punch
A Securitisation, Punch Taverns Finance
plc; and (ii) in the context of the
Punch B Securitisation, Punch Taverns
Finance B Limited;
Noteholder Meetings the meetings of the 16 classes of Noteholders
in respect of the Securitisations,
at which their approval for certain
resolutions necessary to implement
the Restructuring will be sought, and
which have been convened pursuant to
a notice dispatched to them on or about
the same date as this announcement;
Noteholders holders of the Notes in the Punch A
Securitisation or the Punch B Securitisation;
Notes notes issued under the Punch A Securitisation
or the Punch B Securitisation;
Obligors companies in the Punch Group that have
granted a guarantee and/or security
in relation to a Securitisation (and
Obligor shall be construed accordingly);
PIK "payment in kind" interest (that
is, where accrued interest is capitalised
rather than paid in cash);
Punch A Core Estate the core leased and tenanted pubs held
in the Punch A Securitisation from
time to time;
Punch A Estate the Punch A Core Estate and the Punch
A Non-Core Estate;
Punch A Non-Core Estate non-core leased and tenanted pubs held
in the Punch A Securitisation from
time to time;
Punch A Securitisation the whole-business securitisation of
Punch Taverns Holdings Limited and
certain of its subsidiaries through
the issue of fixed and floating rate
notes by Punch Taverns Finance plc;
Punch B Core Estate the core leased and tenanted pubs held
in the Punch B Securitisation from
time to time;
Punch B Estate the Punch B Core Estate and the Punch
B Non-Core Estate;
Punch B Non-Core Estate the non-core leased and tenanted pubs
held in the Punch B Securitisation
from time to time;
Punch B Securitisation the whole-business securitisation of
Punch Taverns (PMH) Limited and certain
of its subsidiaries through the issue
of fixed and floating rate notes by
Punch Taverns Finance B Limited;
Restructuring the proposed restructuring of the Securitisations
on the basis set out in this announcement;
Securitisations the Punch A Securitisation and the
Punch B Securitisation;
Security Trustee Deutsche Trustee Company Limited;
Share Consolidation the share consolidation proposed to
be effected immediately following the
Restructuring and the Firm Placing,
by the consolidation of the Existing
Ordinary Shares and New Ordinary Shares
into Consolidated Ordinary Shares,
on the basis of 1 Consolidated Ordinary
Share for every 20 Existing Ordinary
Shares and New Ordinary Shares;
Subscription Agreement the agreement entered into by Punch
and each of the Funds on 18 August
2014 for the allotment and issue of
1,273,005,000 New Ordinary Shares to
the Funds at 3.93 pence per New Ordinary
Share, pursuant to the Firm Placing;
Super Senior Hedge Notes super senior notes to be issued by
the Note Issuer to the interest rate
swap provider pursuant to the restructuring
of the Punch A Securitisation; and
Super Senior Swap Loan the super senior loan to be payable
to the interest rate swap provider
pursuant to the restructuring of the
Punch B Securitisation.
[1] Including the mark-to-market on interest rate swaps.
[2] Illustrative leverage had the closing of the restructuring
taken place on 21 June 2014, based on gross securitisation debt at
21 June 2014 (excluding the mark-to-market on interest rate swaps),
less GBP15m of cash liquidity balances in Punch A, GBP20m of cash
liquidity and illustrative retained cash amount in Punch B at close
and GBP6 million of cash liquidity balances held outside the
securitisations; and underlying EBITDA for the 52 weeks to 21 June
2014. The actual leverage at closing will be dependent on actual
cash balances and confirmation of the mark-to-market on interest
rate swaps at closing.
[3] Excluding the mark-to-market on interest rate swaps.
[4] Illustrative leverage had the closing of the restructuring
taken place on 21 June 2014, based on gross securitisation debt at
21 June 2014 (excluding the mark-to-market on interest rate swaps),
less GBP15m of cash liquidity balances in Punch A, GBP20m of cash
liquidity and illustrative retained cash amount in Punch B at close
and GBP6 million of cash liquidity balances held outside the
securitisations; and underlying EBITDA for the 52 weeks to 21 June
2014. The actual leverage at closing will be dependent on actual
cash balances and confirmation of the mark-to-market on interest
rate swaps at closing.
[5] Excluding the mark-to-market on interest rate swaps.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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