Punch Taverns' shares bounce back on debt reassurances

Punch Taverns' shares bounced by more than four per cent this morning after yesterday's reassurances that its debt position was secure.

The group's shares rose 13.5p to 331.75p after it brought forward the publication date of its interim management statement (IMS) in order to counter rumours that its balance sheet was looking precarious and that it was in danger of breaching its banking covenants.

Its shares had fallen more than 14 per cent since the start of this week as talk of potential problems began to grow.

Responding to negative research notes from two City brokers - with one firm suggesting a rights issue may be necessary in 2009 - Punch chief executive Giles Thorley told thepublican.com ​the group had released its IMS 14 days early to put an end to the debt speculation dogging the business.

Such talk was "nonsense", Thorley said, and came from a few people with "their own agendas".

Revealing that it believed it could follow Enterprise Inns in becoming a real estate investment trust (REIT) without the need to split out its Spirit managed pub estate, Punch said it had no refinancing requirements on any of its securitised debt and the group remained "extremely robust from both an operational and financing perspective".

The group also announced trading data for the 44 weeks to June 21 2008, with profits from its leased estate down 3.4 per cent and turnover across its managed pubs down 3.6 per cent.

Analysts believe these figures suggest declines of five per cent and 5.9 per cent respectively for the last 16 weeks of that period.

While its shares bounced back today trading continues to be tough. One analyst said while Punch boss Giles Thorley was "an assured operator" his options going forward were becoming more limited as the scale of the group's debt and the state of the economy "began to tell".

Punch plans to go ahead with its proposed July 7 presentation to further outline its REIT proposals and other financing issues.