Punch Taverns invites bond holders to sell up

Punch Taverns has invited holders of its 2010 convertible bonds to sell their holdings back to the company for 97 per cent of their par value, plus interest.

The pubco said the offer to sell would remain open until July 15, and was conditional upon the completion of the issue of ordinary shares in the group, announced yesterday.

Punch said its share placing of 375m shares, announced yesterday, would raise £375m.

The offer price of £1 a share represented a discount of nearly a third compared with the closing price of the group's stock on June 12, 2009.

Half the new shares will be made available to existing shareholders at effectively seven new shares for every ten held, with the balance offered to new investors.

Analysts described the placing as "comfortably oversubscribed", with some seeing the group having gotten a grip on its debt situation.

Douglas Jack of Numis Securities said although upside from reducing debt and turning around the company had fallen, "there is still plenty to go for, with a positive outcome now more certain".

After slumping more than 29 per cent yesterday in the wake of the share placing announcement Punch's shares were up nearly five per cent this morning at 108.75p.

With Punch and recently Greene King going to the market to raise funds the spotlight will now be on other companies to see if they follow suit.