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Punch Taverns’ good pub, bad pub split hits bondholders

Embattled debtor looks to buy time as performing managed pub business is removed from leased pub division operations


Troubled UK pub group Punch Taverns released its much-anticipated strategic review yesterday with the announcement that it plans to split itself in two. Chief executive Ian Dyson said the firm will demerge its performing managed pub division from its struggling leased pub division – in effect creating a “good pub, bad pub” structure.

Bondholders in the debt-laden company are under no illusions about what this means: they see it as a way for the company to protect the good part of the business from the necessary and painful restructuring that must come for the leased estate. In an angry announcement yesterday, the Association of British Insurers (speaking for the bondholder committee) said: “This review does nothing to address this key issue of turning around the trading, and rather than engage in discussion with bondholders about that now, it prioritises a demerger of Spirit costing £30 million. This says a lot about where Mr Dyson and the [company] see their priorities. This strategic review does nothing to address the issues in the tenanted estate and is a “walk-away” by another name.”

What the demerger might be trying to achieve is the debt for equity swap that seems the most likely solution for the £2.7

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