LONDON Jan 27 Punch Taverns' creditors urged the British pub company on Monday to reopen negotiations over a restructuring of its debt, saying they would not support an earlier proposal to avoid a default.
The company announced it was embarking on a debt reduction plan earlier this month, after being hit hard by Britain's economic downturn, and is trying to reduce 2.3 billion pounds ($3.80 billion) of debt.
Punch's debt structure is complex, with debt split into two securitised vehicles, Punch A and Punch B, and bondholders rejected the proposal put forward early last year stating it was too generous to shareholders and junior creditors.
The pub firm then put forward on Jan. 15 a revised proposal of a debt extension and a reduction in the amount that will be repaid to creditors.
But sources close to the bondholders said the creditors had found issues with the commercial terms, the structure of the new notes and the documentation.
Creditors ABI Senior Noteholder Committee, Angelo Gordon, Oaktree Capital Management and Warwick Capital Partners said on Monday they were unable to support the revised proposals, and would vote against them at any meetings of the issuer companies.
"The creditors believe Punch should reopen negotiations ... (and) remain willing to work in good faith to agree a consensual restructuring for both Punch A and Punch B," they said in a statement.
"(We) continue to believe this to be in the best interests of all stakeholders," they added.
The creditors said they had various blocking stakes in a number of classes of Punch A and B notes.
Punch said it had acknowledged the statement from its creditors and would be available for discussions on the restructuring proposals.
Bondholders will vote on the restructuring on Feb. 14.
Shares in Punch were down 1.0 percent at 15.00 pence at 1141 GMT.