The challenge of turning around Spirit, Punch's managed division, could be made harder by the problem of additional reversionary leases, according to Deutsche Bank analyst Geof Collyer.
Spirit has 45 leases bounced back from the adminstration of Orchid in December 2008 and four more from the administration of Bar Room Bar. There were 20 more sites that reverted back in the prior year out of a group originally sold to Alchemy Partners' Tattershall Castle Group.
Collyer said: "All these will be acting as a major drag on divisional performance. The danger is now the problem could get worse — from two angles, both relating to Regent Inns.
"Now Regent has gone private, there is a possibility that it seeks some kind of financial restructuring off-market, which could see some of the 31 Old Orleans sites Punch sold Regent in 2006 coming back to Punch.
"The second relates to something outside of Regent's control. Back in February, it gave out details of the number of outlets that the group has sublet or assigned since 1993 — 82 venues. So Regent is vulnerable itself to reversionary lease pressure caused by sites getting into financial difficulty through tough trading conditions on the high street. In a worst case scenario for Regent, Old Orleans sites would revert automatically.
"On top of that, there were around 35 pubs that couldn't convert to lease from managed because the tenure was too short or they couldn't get landlord permission.
"Excluding Old Orleans, we make that 105 out of the 875 pubs in the division that Punch were rather not there, at least one third of which will be losing money and many of the rest will be making a relatively small contribution to the Profit & Loss.
"Punch must hope Regent stays solvent to avoid the problem getting any worse."