Bad pubs

By THIS IS MONEY
Updated:

 

The Daily Mail City team explain the difference between Punch Taverns' 'good' managed pubs and 'bad' tenanted pubs division.

Pint of Beer

Split: Punch may spin off its 'good' managed pub division

I have been to a few

Maybe you have, but we are not talking about pricey pints or microwaved food. We are looking at how Britain's biggest pub group is considering splitting itself into two. You could say a 'good pub' and a 'bad pub'.

So you are talking about décor and ambience?

Ummm, no. Punch Taverns has two divisions. Its better-performing business manages pubs directly, running chains such as Chef & Brewer, and is made up of around 800 pubs. The rest of the business, a network of nearly 6,000 tenanted pubs, is weighed down by billions of pounds of debt.

Tell me more

Chief executive Ian Dyson is due to update the City with strategy plans this morning. He has been carrying out a review since he took charge last year. The split is thought to be one of the ideas he has considered. The managed pub division, the 'good pub', would be spun off into a separate listed company.

And the 'bad pub'?

Analysts think Dyson would strike a deal with bondholders, who are owed all the debt, with new terms that would allow him to sell or close hundreds of premises and restructure the balance sheet.

The bondholders are also preparing for the possibility of an extreme option, were Punch to default on its obligations, leaving them to take control of the tenanted pubs.

Most watched Money videos