Punch to announce securitisation deal for cash to expand

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The Independent Online

Giles Thorley, chief executive of the 4,500-strong Punch Taverns pub chain, is this morning expected to announce the £300m securitisation of 500 pubs to free the balance sheet for further expansion.

Analysts expect Mr Thorley to use Punch's pre-close trading statement to announce a bank deal for the group's 500 most recently acquired outlets, which have been bought through a mixture of cash and debt. The lenders will effectively let Punch take out a mortgage on these pubs.

A spokesman for the group said yesterday: "Details of the refinancing will be disclosed with the trading statement."

Punch was formed five years ago from part of the old Bass tenanted estate. It has a declared aim of acquiring 300 pubs a year, and is believed to be interested in buying an estate of that size from whoever buys Scottish & Newcastle's pubs later this year.

Mr Thorley is also understood to have made an informal approach to Pubmaster, which controls 3,200 pubs and claims to be Britain's leading independent tenanted pub company.

When analysts visited Punch's Burton-on-Trent head office in July, Robert McDonald, the finance director, told them securitisation offered the group an opportunity to borrow large sums at low cost, because it was backed by the property assets in the pub estate.

He said: "Securitisation suits our business, as it provides long-term stable debt finance to match our income streams. We use short-term facilities to make new acquisitions, but there is an opportunity to securitise these pubs on a long-term basis and lock in current interest rates.."

Once the debt has been securitised it can be traded between banks.