Punch Taverns Share Discussion Threads

[timbo003] 13/10/2014 09:24

1 for 20 share consolidation today as previously announced in the restructuring proposals:


It looks like shareholders have taken a bit of a haircut in the consolidation process (as often happens)

Current share price of 138p (mid), corresponds to old share price of 6.9p

The shares closed on Friday trading at 7.5p bid, 8.0p offer.

Ouch!

[timbo003] 08/10/2014 22:05

the troll

Perhaps they are selling at 8.05p because they have just acquired shed loads at 3.93p in the firm placing as part of the restructuring?

[the troll] 08/10/2014 17:30

I stand corrected, 5m @ 8.05p 'dumped' 8 mins. from close; an II surely ??

why do this now ???? I'll never understand equity markets; on the other hand, if they're offered @ 8p tomorrow then...... I'm in again.

[the troll] 08/10/2014 16:28

all done & dusted with management positive on prospects.

FWIW, I've calculated c. 21 pps of NTA's ( allowing for cancelled debt but excluding 7 months profit & rights proceeds ) & c. 5.5x of PE left for pre-reorg. ords.

as respects NTA, it's worth noting they've sold 2 small portfolios of central London pubs for 152% over book ! ( sell a few more & the remaining debt will disappear like snow in July ! ); methinks there's an undisclosed re-valuation surplus hiding ( IMHO ).

so a discount of c. 60% on STATED nav & a PE of < 6X. I find that good value ( NAI ) & have bought some more ( no problem doing so; market's reaction - well, zilch basically. )

[capricornant] 27/9/2014 00:17

Its not looking good at all,I really do fear for this one, this level of debt is unsustainable and no matter how many band aid you place on it I don't think there is any hope. Denial can no longer be an option. Set them free!

[timbo003] 23/9/2014 17:05

Green King sniffing around Spirit (indicative £1/share) I see:



I do recall suggesting a year ago that the chartists should be looking at Spirit and not at Punch (post demerger) as that is where the value lies:

[timbo003] 18/9/2014 06:14

Well note holders and shareholders approved the proposals, although judging by the wording of the announcement on the shareholder voting, it looks like some turkeys did vote for xmas at the meeting:


For resolutions decided on a show of hands, the following levels of proxy appointments and associated instructions were received prior to the meeting...

Timetable for the resulting restructuring will now be as follows:



Closing Date
8 October 2014


Admission and commencement of dealings in new ordinary shares issued pursuant to the restructuring
8.00 a.m. on 8 October 2014


CREST accounts expected to be credited with entitlements to new ordinary shares issued pursuant to the restructuring
8.00 a.m. on 8 October 2014


Record time for the share capital consolidation
5.30 p.m. on 10 October 2014


Share capital consolidation effective
13 October 2014


Admission and commencement of dealings in consolidated ordinary shares
8.00 a.m. on 13 October 2014


CREST accounts expected to be credited with consolidated ordinary shares
8.00 a.m. on 13 October 2014


Certificates for consolidated ordinary shares to be held in certificated form despatched
By 20 October 2014

[timbo003] 05/9/2014 13:39

Presumably the equity shareholders will vote it through (75% of votes cast required), as many won't vote (due to apathy) and turkeys generally don't vote for Xmas.

The vote with Punch A and B might be a bit more of a close run thing, I suspect there are far less note holders than share holders and I suspect most (if not all) will vote.

They currently have 72% of the note holder votes, but will need 75% (of the votes cast).

[jeffian] 05/9/2014 11:11

Crikey! To put out an RNS just to say "Increased support for the proposed restructuring" sounds a bit desperate, doesn't it? What with this vote on 17/9 and the Scots Yes/No vote on the 18th, it sounds as if it's all going to the wire!

[timbo003] 21/8/2014 18:12

Jeffian

Yes indeed, still a big risk that PUB shareholders could be wiped out.

If I were a PUB shareholder (at the time of the demerger with Spirit), I think I would have wanted the Matthew Clark business to go to Spirit rather than stay with Punch, that would have been much safer I would have thought. I suspect it is too late in the day to demerge it now and ring fence the value for PUB shareholders.

[jeffian] 21/8/2014 10:06

timbo,

Thanks for pointing out that I'd omitted to take account of the debt w/o effected by the debt/equity swap. I felt something wasn't right!

Any road up, my point remains that there is still risk here. There must be a chance that the deal won't get done at all. Even if it is, the resultant animal doesn't look the most attractive investment proposition. When they split Spirit out, it looked then as if they'd dumped all the problem on poor old PUB and I don't think it had much of a chance from then.

[timbo003] 21/8/2014 09:03

An aide Memoire (from the 2013 annual report):

Note:
* Matthew Clarke is on the books at £49.3M
* Goodwill is on the books at £176.2M

[timbo003] 21/8/2014 08:04

Quick post script

I see that on the ADVFN fundementals that the current net asset per share is quoted as 44p/share and the net tangible assets are 17p/share. Presumably the difference of 27p is due to worthless goodwill. In which case post refinacing PUB will have a tangible net asset per share of minus 3p. So from an asset perspective the shares will just have option value.

Note to self: Don't forget there will be a 1 for 20 share consolidation post refinancing too, thereafter multiply those price per share numbers by 20X

[timbo003] 20/8/2014 22:57

jeffian

This is probably way too simplistic, but I think that debt will decrease by £600m in the debt for equity swap and firm placing, so net assets should increase by £600m. They will be issuing (665.5/15)*85 additional shares i.e. 3,711m new shares, giving a total of 4,437m shares, therefore adjusted net asset per share should be (£600m+£329m)/4,437m = 20.9p/share (?)

Assuming it all goes ahead, I would be astonished if the shares trade anywhere near that level, I highly suspect that many of the pubs (especially in at the bottom end of the portfolio) have book values way in excess of real market value.

[jeffian] 20/8/2014 19:45

There is, theoretically, a Net Asset Value of £329.3m which will, of course, include the value of the Matthew Clark stake. I don't know what would happen in "an event of default" but I assume it would be a mess with liquidators/administrators moving in and in those cases disposals are made at 'best they can get' not what it says in the balance sheet. Administrators/liquidators also always seem to rack up a lot of expenses, so who knows what would be left?

I'm probably going to show up my financial idiocy here but, pre-restructuring, that £329.3m is attributable to the 665.5m shares currently in issue, i.e. around 50p/share. If existing shareholders are to be diluted to 15% of the total equity, doesn't that mean post-restructuring the NAV/share will be 7.5p or have I missed something?

[timbo003] 20/8/2014 19:14

Jeffian

If it does go belly up regarding the refinancing, wouldn't PUB shareholders be left with the 50% of Matthew Clarke (the wholesale business), which is presumably worth something?

With a post-tax contribution of £4.8m and good prospects ahead (apparently), it might be worth 8X earnings?, ie about £40m, equivalent to around 6p/share.

I have no position, just watching with interest as an owner of a freehold of a back street community boozer.


From the 2013 annual report (page 7):





Matthew Clark joint venture

Matthew Clark, the 50% joint venture with Accolade, has performed strongly in the year, in what continues to be a very competitive market. The post-tax contribution to Punch of £4.8m for the year represents a 40% increase on the prior year. Matthew Clark has significant scale in its marketplace as the largest independent drinks wholesaler and distributor to the UK leisure and hospitality industry, with gross annual turnover of c.£800m to c.20,000 customers. Turnover increased by 9% in the joint venture's last financial year and the business has clear plans for continued growth in market share from which Punch will benefit.

[jeffian] 20/8/2014 18:54

If I were feeling mischievous, the troll, I might suggest that the Noteholders get ETI to manage the estate for them pending disposal. A win/win? But then, as an ETI shareholder, I would say that, wouldn't I?!

8-)

[the troll] 20/8/2014 18:48

another thought provoking post from jeffian, good stuff - go with him if you want to live.

with ETI you get; P/E < 7x, discount to NTA of c. 60% ( & even higher grossing-up for theoretical deferred-tax ) + finance sorted & Co. investing again; if you MUST have exposure to the Pubco. sector, why buy PUB over ETI ?? IMHO, it just doesn't add up ( NAI ).

[jeffian] 20/8/2014 16:26

The risk remains that they won't get the deal away. They missed the 11 August 'deadline' - presumably because they were struggling up to the last minute to get the requisite number of Noteholders on board - and, having failed to do so, have had to launch the rescue package in the 'over-run' period releasing figures showing that they are still a long way from getting the 75% vote they need. They are trying to frighten "all stakeholders" with the spectre of default, but the Noteholders hold all the aces, as they themselves admit -
"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" -
and the "adverse consequences" for Noteholders are pretty limited as they are secured on the pub assets. This has always been about trying to salvage something for the shareholders and it seems quite possible to me that some Noteholders will be prepared to call their bluff. If they get it away, the upside looks to be around 5p. If they don't, it'll be a total loss. Faites vos jeux, ladies and gentlemen.

[the troll] 20/8/2014 14:48

you'd get much better value ( & less risk ) over at ETI though surely ? ( NAI )

[ant15] 20/8/2014 03:57

Bought in recently and already in profit...Holding for the debt for equity swap, share offer and to watch the shareprice move up over the next 6 months

[supercity] 18/8/2014 07:10

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 ProposalsIn laymans terms - all current shareholders are screwed

[jeffian] 11/8/2014 18:49

It wouldn't make any difference to the tenants; they're either tenants of a pubco, or the administrator, or a new owner. Breaking up the pubco's wouldn't lead to a Brave New World where all publicans had free-of-tie leases or became owner-occupiers. If they could have afforded to do that, they would already have done so.

[capricornant] 11/8/2014 18:32

Amen to that!