PUNCH Taverns called time on more than 2,500 pubs as part of a major shake-up to tackle its £3bn debt mountain.
The group, which will look to sell the outlets over the next three to five years, will also demerge its estate of own-operated pubs – including Chef & Brewer, Fayre & Square and Flaming Grill – by the end of the summer.
Punch’s new boss, the former Marks & Spencer finance director Ian Dyson, said a demerger will boost prospects for the faster-growing Spirit business, which is likely to have a portfolio of about 950 pubs in the future.
The demerger would leave Punch with about 5,200 leased and tenanted pubs, which the company expects to reduce to about 3,000 through disposals.
Another 450 non-core pubs are to be offloaded from the Spirit business.
Punch said its current strategy was not sustainable and that structural change was needed to achieve value for shareholders.
It built up its debt mountain through an acquisition spree that included a £2.7bn deal for the Spirit managed pubs in 2005. In recent years, it has looked to pay down debt, which currently stands at about £3bn.
The remaining 3,000 pubs in the leasehold estate, in which landlords rent the pub and get their supplies from Punch, generated average net income per pub of about £80,000 for Punch in the year to August.
Those pubs in line to be sold will continue to have the same support from Punch as the core division. It expects to dispose of the outlets at a rate of about 500 a year – fewer than the number achieved in 2009 and 2010.
Mr Dyson said the demerger of the Spirit business from the leasehold pubs would allow the two operations to pursue different strategies.
