* Bondholders block company's restructuring plan
* "Final" proposals back to the drawing board
* Creditors push alternative to equity plan
By Owen Sanderson
LONDON, Feb 12 (IFR) - Punch management has withdrawn its restructuring
proposals, which it described as "final" less than a month ago and which were
going to be presented to noteholders at meetings on Friday.
The proposals ran into a wall of bondholder objections, with multiple
investor groups publicly refusing to sign.
Some of the bondholders are now working on their own restructuring plan,
which a source close to the ABI Senior Bondholder Committee described as "well
advanced amongst the creditor group".
The investors that have publicly come out against Punch management's
proposals include a senior noteholder group known as the ABI Senior Bondholder
Committee, which has blocking stakes in senior notes of both securitisations;
Angelo Gordon Europe, with a blocking stake in one class of Punch A; Oaktree,
with a blocking stake in multiple classes of Punch A; and Warwick Capital
Partners, which has a blocking stake in Punch B.
Punch management said on Wednesday that it was withdrawing the restructuring
resolutions "in order to facilitate a period of further engagement with
stakeholders", but reminded noteholders that both securitisations will default
without a consensual restructuring.
"The Board remains of the view that a consensual restructuring is in the
best interests of all stakeholders and can be agreed ahead of the next covenant
reporting date of April 15," said a notice from the management.
The source close to the ABI Senior Bondholders said: "Punch PLC [the
management of the equity] has wasted the last two months trying to get their
shareholder-friendly deal to stick, whilst talking up the risk of default. So,
it is time for the Boards of the borrowers, Punch A and B, to step forward to
conclude the alternative deal that has support from a broad base of creditors."
Although both securitisations will breach default triggers without a
restructuring (or continued support), what actually happens following default
depends on the note trustee, and on direction from noteholders.
An insolvency of Punch B does crystallise a pension liability - which ranks
above noteholders - on the securitisation group.
But issuer insolvency, where the issuer cannot pay its debts or is
balance-sheet insolvent, is not the same as a contractual Event of Default, as
defined in the securitisation documents. In an Event of Default, the
securitisation documents define what occurs, rather than the statutory
insolvency procedure. This means noteholders can ask to waive the Event of
Default if they choose.
"Punch A and Punch B have about GBP200m of cash and have been offered
lenders' support," said the source close to the ABI Senior Bondholders
Committee. "The creditor plan can be implemented after a default if necessary -
but a default is entirely avoidable."
Punch management's proposals, outlined on January 15, would have cut debt
from GBP2.3bn to GBP1.83bn and net leverage from 11 to 8.7 times Ebitda.
The meetings on Friday will still be held for procedural reasons, but no
resolution will be put forward, and the meetings will run on a tighter schedule,
since no business is being discussed.