The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
In a couple of weeks, Punch Taverns is due to release its full-year figures. There is an expected fall from 5.7p down to 4.7p for the adjusted earnings per share. Sales are also called lower, dropping from £457.6 million down to £442.5 million. Even with these figures due to come in lower, the company’s pre-tax profits are expected to jump from £17 million up to £40.45 million.
Over the last six months Punch Taverns has been working to restructure its debt, and following the agreement of Lloyds now only need the Royal Bank of Scotland to toe the line. This has seen the investors stake in the company reduced to just 15% and as such coincided with the share price falling below 10p.
In order to help the liquidity of the shares, Punch Taverns will be restructuring them. For every 20 shares an investor holds in the company, they will get one new share. This comes into effect on Monday 13 October.
The reason for all this debt restructuring is the overly enthusiastic manner that the firm went about acquiring companies over the last decade, and it is now that this financial burden has come home to bite them. The squeeze on spending power that the UK public felt during the double dip recession has brought this to a head.