Punch Taverns plans to sell 158 pubs, it has emerged.
The indebted UK pub group currently has a portfolio of around 3,500 premises. The sale of the 158 pubs comprises 150 of its non-core premises, as well as eight core businesses, the latter have been deemed to no longer meet the criteria of a core pub.
This is the group's latest move to shrink its estate following a major debt restructuring.
In October 2014, Punch completed a deal to restructure its debt with lenders Royal Bank of Scotland and Lloyds Bank. The company, which was founded in 1997 had aggressively expanded its estate in the 2000s, taking advantage of the credit conditions that ended with the financial crisis. The group also says that the smoking ban and beer duties have contributed to its financial difficulties.
According to the BBC, the group plans to continue selling non-core pubs at a rate of about 200 a year.
Focus on quality
Chief executive Duncan Garrood, who took over the job as boss for the pub group earlier this year, said the sale would allow the business to focus on the "higher quality core pub estate".
Punch is reported to be receiving £53.5 million for the pubs from buyer NewRiver Retail, a real estate investment trust that focuses on the UK retail sector. The deal is expected to be completed by mid-September and proceeds from the cash sale will be used to reduce the firm's net debt.
Over the last 12 months, the pubs that are being sold generated £7.3 million in earnings before interest and tax. They have a current book value of £52.5 million, Punch said in a statement.
Once the sale is complete, the company's core estate will have about 2,900 pubs. The non-core estate will have about 550 pubs.
At the time of its last financial report, Punch had £1.5 billion of net debt. The company says it will issue a full-year trading update for the financial year to August 22nd on September 1st.
During morning trading in London, shares in Punch Taverns plc dropped by 1.18 per cent to 125.50p.
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