Punch's offer to sell its pubs to sitting licensees is a shrewd move.
It sounds fair and seems to be treating tenants as grown-ups. It also makes the company look good outside the trade — MPs on the Tisc/Berr committee, for example, will think this is a positive move. And it may also provide funds for Punch to continue buying back more of its heavily discounted bonds, and help relieve the enormous financial pressures it's under.
The move is another indication of how the pubco model is reinventing itself, with companies everywhere desperately trying to slough off under-performing pubs at a time when there are not the corporate buyers as of yore. Enterprise, while not making such bold statements, is quietly going about reducing its own estate too.
How many Punch pubs actually transfer to their licensees we'll soon see. Of the 500 previously up for sale, apparently about 100 attracted interest from the licensees. On that ratio, 1,500 pubs across the estate could change hands — though that seems higher than Punch were indicating last week.
For the sell-off to go anywhere, though, two things must happen. Firstly, Punch must be realistic, very realistic, about the asking price. As just one example in our property pages this week illustrates, the world has changed. A Derbyshire freehold pub bought for £220,000 three years ago sold last week for £77,000. Punch will achieve very little if it holds out for book values from a few years back. Those prices are anachronistic in today's climate. And given its bonds can be bought back at 20p in the pound at the moment, it should have the latitude to accept more realistic deals.
Secondly, if Punch licensees are to find the money, banks must do what Government has been ordering them to do: lend to small businesses with a decent financial case. Our lead story this week tells us that this is just not happening. Licensees are struggling to get the support they need from their banks — and many are folding, or on the brink of collapse as a result.
This is a scandal. Billions of pounds of our money is being pumped into banks in order for them to kick-start the economy by lending to businesses and particularly small businesses like pubs. Yet all it seems banks want to do is rebuild their own finances — and pay themselves their so-richly-deserved bonuses too, of course.
If you are a licensee of a bank that says "No", please contact us with your story. It will help us build a dossier to take to Government showing how flagrantly their subsidised bankers ignore the Prime Minister's orders.
National Pubwatch's annual conference continues to grow in stature. This year's event drew top figures from across the trade and Government. If you're not involved in a local pubwatch, it's high time you were!