Punch Taverns

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Punch Taverns plc
Public
Traded as LSE: PUB
Industry Pubs
Founded 1997
Headquarters Burton upon Trent, England, UK
Key people
 Stephen Billingham
(Executive Chairman)
Duncan Garrood
(CEO)
Neil Griffiths
(COO)
Revenue £420.8 million (2015)[1]
£183.9 million (2015)[1]
£ loss 82.6 million (2015)[1]
Number of employees
 409 (2015)[1]
Website www.punchtaverns.com

Punch Taverns plc is a pub and bar operator in the United Kingdom, with around 3,500 leased and tenanted pubs.[2] It is headquartered in the traditional brewing centre of Burton upon Trent in Staffordshire. It is listed on the London Stock Exchange and is a constituent of the FTSE SmallCap Index. The company has been in negotiation with its bondholders in order to secure its future as a going concern. In September 2014 bondholders and shareholders agreed a restructuring plan with bondholders taking an 85% stake in the company.[3]

History

The company was established by former PizzaExpress head Hugh Osmond and Café Rouge founder Roger Myers in 1997 when they bought the Bass portfolio of public houses.[4] In 1999 Punch purchased Allied Domecq's pubs for £3 billion, beating a rival bid from Whitbread.[5][6] After the deal, Punch spun off its managed pubs into a separate division, Punch Retail, which was later renamed Spirit Group.[7]

In 2002 Punch demerged the Spirit Group[8] and then floated itself on the London Stock Exchange.[9] Later on, Punch acquired the Alehouse and Beer Engine names from Whitbread and later acquired Inn Business. Punch then bought Pubmaster in November 2003: the acquisition of larger rival Pubmaster, catapulted the operator to number one in the league.[10] The acquisition took the group to more than 7,000 pubs and cemented Punch's position as a major pub operator. After completing this deal Punch later bought InnSpired Inns plc,[11] and then Avebury Taverns.[12]

Meanwhile, Spirit Group (at that time independent from Punch Taverns) expanded when it acquired Scottish & Newcastle's 1,450-strong pub estate in 2003, beating off rival Mitchells & Butlers.[13]

In September 2005, Spirit Group sold its "City Nights" portfolio of in excess of 180 pubs and clubs, en-bloc, to Alchemy - the financial backers behind the newly formed Tattershall Castle Group (TCG).[14]

In December 2005, Punch agreed to re-acquire the Spirit Group for £2.68bn which since 2002 had been owned by the private equity firms Blackstone, Texas Pacific and CVC Capital Partners.[15]

In 2006 the Company sold its Old Orleans pub chain, which it had acquired when it bought Spirit Group, to Regent Inns.[16] Punch also sold 290 Spirit sites to the private equity firm GI Partners.[17]

In March 2008 Punch withdrew from a bid to merge with Mitchells & Butlers.[18]

On 22 March 2011 Punch announced that as part of a strategic review it would demerge its managed pub division.[19] Spirit Pub Company was established as a separate company and took over 803 managed pubs and 549 leased pubs. This included the branded pubs Chef & Brewer, Taylor Walker Pubs, Fayre & Square, Original Pub Company, Flaming Grill Pub Company, John Barras Pub Company, Wacky Warehouse and Good Night Inns. Each shareholder in Punch received one share in Spirit Pub Company. The demerger was effective on 1 August 2011.[20]

In October 2015 Punch disposed of its 50% holding in Matthew Clark, a drinks wholesaler and distributor, to Conviviality Plc.[21][22]

Operations

Leased pubs

Punch had 4,096 pubs as at 17 August 2013. Of this total, 2,990 were classed as core. The company's stated aim is to make each core pub "the best of its type in its marketplace".[1] The remaining 1,106 are classed as non-core. The company operates non-core pubs to maximise short-term returns with a focus on costs and cash-flow, with an expectation that most will be sold within four years. Approximately 1,100 non-core pubs had been sold between 2011 and 2013.[1]

Debt and going concern

The company and its subsidiaries have issued loan notes in two separate tranches; tranche A (£1,449m of debt secured on 2,356 pubs) and tranche B (£884m of debt secured on 1,675 pubs). In their 2013 annual report, approved on 24 September 2013, the Directors state that the group is in compliance with its covenants and has adequate cash resources for the foreseeable future. However, the Directors state that it is in the best interests of all stakeholders to achieve a consensual renegotiation of both of the securitisations. If a covenant breach were to occur and if loan note holders were to require immediate repayment then the ability of the group to continue as a going concern would be in doubt.[23]

Criticism

Punch Taverns was one of the companies reviewed as part of a 2009 House of Commons monopolies inquiry into pub groups. On May 13, 2009, the report[24] was published, and it "raises a series of questions about the pub company (pubco) tied pub business model and calls on the Government to act urgently, in particular, to refer the matter to the Competition Commission. It challenges the pubcos which operate a tie to prove its benefits by giving lessees the choice between a tied or free of tie lease."[25] The report also raises issues regarding the actual conduct of pubcos in dealing with struggling tenants. Shortly following the committee's report CAMRA issued a 'Super-Complaint' forcing the Office of Fair Trading to investigate this within 90 days. The OFT published its report on the 22nd of October 2009. The report largely cleared the industry of behaving in any way that caused damage to consumers [26]

See also

References

  1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 Lua error in package.lua at line 80: module 'strict' not found.
  2. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  3. ↑ Company announcement of approval of restructuring
  4. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  5. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  6. ↑ Mr Punch aims at Allied Domecq Independent, 22 June 1999
  7. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  8. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  9. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  10. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  11. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  12. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  13. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  14. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  15. ↑ Punch Taverns buys rival pub operator Spirit for £2.68bn
  16. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  17. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  18. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  19. ↑ Company announcement of proposed demerger
  20. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  21. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  22. ↑ Lua error in package.lua at line 80: module 'strict' not found.
  23. ↑ Punch Taverns Annual Report 2013 page 46
  24. ↑ House of Commons. Business and Enterprise Committee: Pub Companies Retrieved 06-07-2009
  25. ↑ MPs publish report on pub companies Retrieved 06-07-2009
  26. ↑ 'Office Of Fair Trading Website - OFT publishes response to CAMRA super-complaint Retrieved 06 Nov 2009

External links

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