Punch Taverns to raise £350m via rights issue

Punch Taverns has announced a proposed £350m rights issue, aiming to use the funds to help pay down debt.

Precise details of the rights issue, which will consist of a firm placing and an open offer, were not available at the time of writing, but the group said the proceeds would principally go towards paying off a large chunk of its 2010 convertible bond.

The group said that while it was going to the market to raise the money it was still confident it could generate enough cash across the business to meet its needs.

The pubco announced the move as said it was seeing "some success" at stabilising the business in the third quarter.

Punch revealed that like-for-like earnings before tax, depreciation and amortisation for the 40 weeks to May 30 were down 11.2 per cent, a similar level to that reported for the 28 weeks to March 7, 2009.

Its managed pubs saw like for like sales for the 40 week period down by 1.2 per cent, "continuing the improving trend across the year with third quarter sales being one per cent up on the same period of last year".

Operating margin for the year to date across the managed estate was estimated to be down by 3.5 per cent compared to being down four per cent at the half year.

While it said it was "confident" regarding its longer term prospects and that its expectations for the full year remained unchanged, Punch said it remained "very cautious over the near-term due to the lack of forward visibility on trading outlook".