Punch Taverns' share value soars after debts cut by £1b
Punch Taverns has reduced its debt by more than £1b since the beginning of the year, causing its share price to soar by 11%.
Analysts expect Punch's debts of £4.5b at the start of the year to be reduced to £3.5b by the end of the year.
In a pre-close trading statement, the operator of 7,500 managed and leased pubs said it had generated £400m through the sale of struggling pubs this year, costing £6m in profits, and it intends to continue with its disposal programme.
The group has now sold a third of the 1,250 troubled pubs in the "turnaround division" set up earlier this year and intends to add a further 450 pubs to the list.
In July, the operator raised £350m through a share issue to help pay back £275m of convertible bonds, which were used to purchase the Spirit Group in 2006 and which mature in December 2010.
Levels of financial support to help struggling licensees weather the recession in the form of rent concessions and increased product discounts have continued to cost Punch £1.6m per month.
Inflation regulatory, food and energy cost increases and promotional discounts have also contributed to a decrease in like for like sales of 1.4% prompting a cautious outlook from the group.
Punch's finance director Phil Dutton commented: "While we are confident of the longer term prospects for the group and our expectations for the full year remain unchanged, we remain cautious over the near-term due to the lack of forward visibility on trading outlook."
Punch puts 1,250 weakest pubs in turnaround division >>
Punch Taverns to raise £350m through share issue >>
Punch Taverns spends £14m on helping licensees during slowdown >>
By Emma White
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