Punch Taverns may de-merge managed pub operation

As the market awaits details of Punch Taverns' strategic review, industry pundits suggest a de-merger of the indebted pubco looks like the route with most merit.

While all will be revealed tomorrow, some observers are backing suggestions mooted in newspapers at the weekend that Ian Dyson, Punch's chief executive, will look to break up the pubco, creating a new managed pub operating company that would be listed on the stock market.

This would leave a leased pub business which, per previously announced plans, would consist of up to 5,000 pubs, following further disposals of under-performing sites.

Analysts said press reports at the weekend which suggested a break up "made sense".

"Removing any linkage between the A and B bond debt and the managed estate should crystallise the value in the latter, creating a company that offers strong growth, lower debt, superior market positioning and less regulatory risk," one wrote in a piece of research.

Another, Simon French of Panmure Gordon, said a de-merger plus a sale of Punch's 50 per cent share in drinks company Matthew Clark, were options that "seemed the most suitable".

Other options include simply handing back the keys to the 5,000-plus pubs against which billions of pounds-worth of debt have been secured - which would see bondholders having to find buyers for the sites - or renegotiating the debt schedule with bondholders.

This last option is believed to be the most remote, since a committee of the bondholders is said to have effectively ruled out any restructure proposals by the pubco.