Pubco debt talks reach stalemate
The following documents were found on a train seat last week...
Memo:
Date: 12/11/2013
From: Pubco Rep
To: Bondholder’s Rep
We appear to have a little bit of a problem on our hands. The tenanted sector of our estate has reached the point of no return. Not to put too fine a point on it, we’re f*****!!
Our computer screens show more red lights than your average Amsterdam back street. And as for the debt graph, well what can I say? It’s morphed into some obscene bloated monster that just sits there gorging and devouring everything we throw at it.
So basically err....I don’t quite know how to say this but err.... we’re not going to able to pay back all that money we borrowed from you. In fact; once we’ve all received our latest round of bonuses I don’t think we’ll be able to pay you anything. We’re completely skint; it’s as simple as that.
What you need to understand is that this is not our fault. The trading environment has changed in a way none of us could have envisaged. This fact, coupled with adverse weather conditions and underperforming tenants, goes a long way to explain why we haven’t actually made any sort of profit in our tied estate since......err.....well as long as I can remember.
So, in light of that we’re looking for a small favour. We were rather hoping that you would consider writing off a portion of the debt; ideally about two and a half billion? This should be more than enough to make us viable again; enabling us to continue doing what we do best, provide our partners with the high level of support to which they’ve become accustomed.
The alternative of course is we just hand over the keys to five thousand or so pubs. Obviously that’s something we’d rather not do as it would inevitably expose the extent to which we’ve over inflated the book value of our estate.
It goes without saying that we take our current debt obligations most seriously and are mindful of the need for urgent talks at the earliest opportunity.
The forthcoming annual company conference, to be held at the Costa Fortune golf complex in Marbella, would seem the logical venue for such negotiations to take place.
We’d like to take this opportunity to invite all bondholders to fly out and join us for the week long conference; together with family, friends, associates, passing acquaintances as well as anybody else on the lookout for a corporate freebie.
We’ll take care of all flight and accommodation arrangements. Reservations have been made at the Ritz Carlton in anticipation of your attendance. A block of British Airways tickets (first class) will be forwarded in due course.
Needless to say, all costs incurred by your party will be met by us.
We look forward to receiving confirmation of attendance in due course.
Memo
Date: 15/11/2013
From: Bondholder’s Rep
To: Pubco Rep
Given your inability to meet existing debt obligations I suspect it is us who will be picking up the tab for this little ‘jaunt’. Consequently, we are obliged to decline your invitation.
It is clear to us that the current situation has come about as a result of complacency and poor decision making in the boardroom. It would appear lessons have not been learned.
The need for a meeting is as you say all too apparent. However we would suggest that the theme of the talks should be ‘paying one’s bills’ rather than seeking write offs to loans acquired to finance reckless spending sprees.
Is it not somewhat ironic that whilst acknowledging that the trading environment has changed beyond all recognition you steadfastly refuse to make any concessions to tenants buckling under onerous obligations that you laughingly label ‘partnership’?
By contrast, the much publicised salary increases board members have awarded themselves suggest an unhealthy preoccupation with self-gain coupled with a continued reluctance to address the fundamental issues that have brought us to where we are today.
The real tragedy is that you continue to remain in complete denial as to your own failures. In 2004 the BEC outlined a number of key proposals that would have made the tied model more equitable. You chose to ignore those proposals.
Nine years on, what have you come up with?
It is apparent to all, apart from you it seems, that the Dickensian business model you continue to adhere to has no place in the modern world. Rather than acknowledge that unpalatable fact you seek to apportion blame elsewhere, whilst frantically endeavouring to drain yet more blood from an already lifeless corpse.
Yet despite all this, you now have the gall to seek clemency.
Let me ask you this.
Did you express similar sentiments when tenants came to you desperately seeking help?
Did you ever acknowledge that the onerous demands you placed upon your partners could only have one sad inevitable consequence?
Did you ever pause to consider how a family must have felt, knowing they were about to be turned out onto the street having lost everything?
Blinded by complacency and greed you were content instead to exploit the situation for your own ends. Evictions and bankruptcies are the legacy of your obscene business model.
Where others saw tragedy you saw gain. Where others saw pain you saw profit.
Yet even now, at this late stage, you continue to pedal your vehicle of misery. Do you really think anyone remains tempted by the prospect of foraging around for the few scraps you leave on the table?
The plethora of boarded up and sold off pubs provide a compelling answer to that question do they not?
Why do you continue to remain so blind to your failings?
Memo
Date: 18/11/2013
From: Pubco Rep
To: Bondholder’s Rep
We are more than happy to comply with any conditions you may wish to impose.
That said, we would ask that sufficient financial provision be put in place to ensure that the generous pension benefits, the golden hellos and golden goodbyes, the golden handshakes, the outstanding severance packages, the lucrative share-option scheme, the substantial perks provided by suppliers as well as all the other well-merited benefits board members have become accustomed to receiving over the years remain in place.
We look forward to hearing from you in due course.
Memo
Date: 19/11/2013
From: Bondholder’s Rep
To: Pubco Rep
***k off!!!
