Punch Taverns plc : Launch of the proposed Capital Restructuring

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PUNCH TAVERNS PLC

("Punch" or "the Group")

Launch of the proposed Capital Restructuring of the Punch A and Punch B securitisations

Overview

§ Punch is pleased to announce the full terms of its Restructuring proposal, which represents the
culmination of 14 months of extensive stakeholder engagement

§ This follows Punch's announcement on 9 December 2013 of its intention to launch formally the final restructuring proposals for the Punch A and Punch B securitisation structures (the "Restructuring"), following which Punch has had further stakeholder engagement

§ The Restructuring is conditional upon the approval of the Punch A and Punch B securitisation noteholders at meetings of the Issuer companies and the approval of certain other securitisation creditors

§ Consent solicitation documents relating to each securitisation and a notice of noteholder meetings to be held on 14 February 2014 are also being made available today

§ The Restructuring proposals are final.   Failure to effect a restructuring is expected to lead to default in the near-term at which point securitisation cash resources (used to facilitate the Restructuring) are expected to be severely depleted with the mandatory prepayment of £188 million of available cash to Class A notes at par and loss of the £52 million Group cash contribution

Capital Restructuring summary

The proposed terms of the Restructuring reflect a number of changes to the proposals announced on 9 December 2013 as requested by stakeholders, including:

§ Fixed or target amortisation schedules included for all senior notes;

§ Modified Spens protection on all senior notes for any prepayments ahead of the amortisation schedules;

§ Increased PIK coupons on junior notes;

§ Strengthened operational covenants;

§ Senior noteholder appointed independent observers to the Boards of the Borrower companies in each
securitisation;

§ Noteholder voting fee; and

§ Interconditionality: Punch's commitment to apply the Group resources which would be necessary for the Restructuring to go ahead is conditional on the approval of the Restructuring by all Classes of Punch A and Punch B securitisation noteholders

The Board believes that the proposed terms of the Restructuring are in the best interests of all stakeholders and will deliver material benefits to them, including:

§ Creating a robust and sustainable debt structure;

§ Preserving the Group structure for the continuing benefit of all stakeholders; and

§ Delivering a materially better position for all stakeholders than default

Further details of the proposed terms of the Restructuring are set out below.  Tables setting out the debt structure within each securitisation structure are also available to view on Punch's website:

www.punchtavernsplc.com/Punch/Corporate/Investor+Centre/Investor+announcements/2014

Stephen Billingham, Executive Chairman of Punch Taverns plc, commented:

"I am pleased to announce formally today the launch of the Restructuring of Punch's securitisation structures, representing the culmination of 14 months of extensive stakeholder engagement. We believe that the Restructuring is in the interests of all stakeholders and delivers a materially better position than the alternative of a default.

The Restructuring will create a robust debt structure which will provide certainty and stability for the business.  It will also provide a solid platform to allow Punch to build on the recent improvement in the Group's tradingand preserve the material synergies of running the two securitisations as part of the same Group.  Stakeholders will be able to benefit from the improvements to the business we are putting in place.

We want all stakeholders to consider the proposals carefully and thoroughly.  We will continue to be available to answer any questions.  It is the view of the Board that the benefits of approving the Restructuring are clear and of benefit to all stakeholders.  However, failure to do so will lead to a much worse outcome with considerable uncertainty for the business and potentially significant loss of value."

15 January 2014

A live webcast at 9.00 a.m. (London time) today and a slide presentation will be available on the Punch websitewww.punchtavernsplc.comand subsequently available on demand.  We recommend you register for the live webcast at 8.50 a.m. on http://cache.merchantcantos.com/webcast/webcaster/4000/7464/16532/32349/Lobby/default.htm

Enquiries: Punch Taverns plc	Tel: [phone]
Stephen Billingham, Executive Chairman
Steve Dando, Finance Director
Media: Brunswick	Tel: [phone]
Jonathan Glass, Mike Smith

Restructuring:
Goldman Sachs International	Tel: [phone]
Andrew Wilkinson, Sarah Mook

The Blackstone Group International Partners LLP	Tel: [phone]
Martin Gudgeon, David Riddell

Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting as financial adviser to Punch and for no one else in connection with the capital restructuring and will not be responsible to anyone other than Punch for providing the protections afforded to clients of Goldman Sachs International nor for providing advice in connection with the capital restructuring, the content of this announcement or any matter referred to herein.

The Blackstone Group International Partners LLP, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting as financial adviser to Punch and for no one else in connection with the capital restructuring and will not be responsible to anyone other than Punch for providing the protections afforded to clients of The Blackstone Group International Partners LLP nor for providing advice in connection with the capital restructuring, the content of this announcement or any matter referred to herein.

TRADING UPDATE

Trading for the 20 weeks to 4 January 2014 was good with like-for-like net income in the core estate up 1.5% and, assisted by weak weather comparatives, delivering growth in average net income per pub across our entire estate.

Management expectations for the Group remain unchanged with the expectation for the core estate to deliver like-for-like net income growth for the current financial year of up to 1%.  The pub investment and non-core pub disposal programmes remain on track with full year capital investment expected to be c.£45m and disposal proceeds, raised largely from the disposal of non-core pubs, anticipated to be c.£100m.

RESTRUCTURING UPDATE

1.         Introduction

Following the announcement on 9 December 2013, Punch has continued to hold extensive discussions with a broad range of stakeholders and their advisers from across the Punch A and Punch B securitisations, with the objective of reaching agreement on the terms of a consensual restructuring for both securitisations.

Further progress has been made during these discussions and the Board is now in a position to set out and formally launch final Restructuring proposals which reflect a number of changes requested by stakeholders to the proposals announced on 9 December 2013, including:

§ Fixed or target amortisation schedules included for all senior notes;

§ Modified Spens protection (at Gilts+100bps) on all senior notes for any prepayments ahead of the amortisation schedules;

§ Increased PIK coupons on junior notes:

o  Punch A B4: Libor cash plus 11.0% PIK

o  Punch B B3: Libor+4.0% cash plus 2.5% PIK;

§ Strengthened operational covenants;

§ Senior noteholder appointed independent observers to the Boards of the Borrower companies in each securitisation;

§ Noteholder voting fee; and

§ Interconditionality: Punch's commitment to apply the Group resources which would be necessary for the Restructuring to go ahead is conditional on the approval of the Restructuring by all Classes of Punch A and Punch B securitisation noteholders

The proposed terms of the Restructuring represent the culmination of 14 months of extensive stakeholder engagement.

The Board believes that the proposed terms of the Restructuring are in the best interests of all stakeholders and will deliver material benefits to all stakeholders, including:

§ Creating a robust and sustainable debt structure;

§ Preserving the Group structure for the continuing benefit of all stakeholders; and

§ Delivering a materially better position for all stakeholders than default

Due to the need to restructure the securitisations to avoid a default in the near-term, Punch is now formally launching the Restructuring and noteholders will be asked to vote on the Restructuring on 14 February 2014.

2.             Consequences of a failure to effect a Restructuring of the securitisations

The Board remains clear that a restructuring of the securitisations is required in order to create a sustainable capital structure.  Failure to implement a consensual restructuring is expected to lead to a default in the relevant securitisation in the near-term.

While the potential implications of a default cannot be predicted with certainty, any default is likely to have a material negative impact for all stakeholders given the risk of material scale dis-synergies, administrative receivership costs, and significant short-term disruption to the business together with a negative impact on pub values.

These factors would also be expected to have a negative impact on leverage and cash flowswithin the securitisation structures.  Illustratively, for the Punch A and Punch B securitisation structures this would be expected to increase the 2017 debt to EBITDA ratio by between 3x and 5x when compared to the Restructuring proposals launched today.

DETAILED TERMS OF PUNCH'S MODIFIED RESTRUCTURING PROPOSALS

PROPOSED AMENDEMENTS TO THE TERMS OF THE PUNCH A SECURITISATION:

Overview	n Class A Notes reinstated as fixed (70%) and variable (30%) notes with fixed note amortisation reprofiled to target 1.2x FCF DSCR and final maturity n Class M-D Notes extinguished for a mix of c.£120.0 million of cash at a discount and c.£320.1 million of new Class M3 and c.£186.4 million of new Class B4 Notes n Monoline financial guarantees to be removed as a condition of the restructuring
Day 1 cash paydown	n £120.0 million of available cash resources used to cancel Class M-D Notes at a discount to par n c.£23.0 million used to cancel 24.0% of Class M1 Notes at 95.0% of par n c.£18.1 million used to cancel 36.5% of Class B1 Notes at 62.5% of par n c.£19.1 million used to cancel 36.5% of Class B2 Notes at 62.5% of par n c.£30.5 million used to cancel 43.4% of Class B3 Notes at 52.5% of par n c.£21.3 million used to cancel 100% of Class C Notes at 25.0% of par n c.£8.0 million used to cancel 100% of Class D1 Notes at 12.0% of par
Class A Notes	n Class A1 and A2 Notes to be exchanged for a combination of Class A "Fixed" Notes with contractual amortisation schedule reprofiled to target 1.2x FCF DSCR and Class A "Variable" Notes n Class A "Variable" Notes will be subject to mandatory cash sweep, to the extent of Excess Cash up to a predefined target / expected amortisation profile n Further details of the maturity and amortisation of the Class A Notes are set out in "Amortisation and maturity"
New Class M3 and B4 Notes	n Remaining Class M and B Notes following day 1 cash paydown exchanged into new Class M3 and B4 Notes at the following prices: n Class M1 Notes: 95.0% of par; 72.5% as new Class M3 Notes and 27.5% as new Class B4 Notes n Class M2 Notes: 82.5% of par; 72.5% as new Class M3 Notes and 27.5% as new Class B4 Notes n Class B1 and B2 Notes: 62.5% of par; 27.5% as new Class M3 Notes and 72.5% as new Class B4 Notes n Class B3 Notes: 52.5% of par; 27.5% as new Class M3 Notes and 72.5% as new Class B4 Notes n Total of c.£320.1 million of new Class M3 Notes to be issued as a result of the allocations described above n Total of c.£186.4 million of new Class B4 Notes to be issued as a result of the allocations described above
Class M, B, C and D Notes cash and new Class M3 and B4 Notes allocations per £1,000 nominal value	Class of Notes Up-front Cash Payment Allocation of New Class M3 Notes Allocation of New Class B4 Notes Total Class M1 £228 £524 £199 £950 Class M2 £0 £598 £227 £825 Class B1 £228 £109 £288 £625 Class B2 £228 £109 £288 £625 Class B3 £228 £82 £215 £525 Class C £250 £0 £0 £250 Class D1 £120 £0 £0 £120
Amortisation and maturity	n Contractual amortisation of Class A(F) Notes profiled to target a 1.2x cash DSCR, with final maturity dates for each Class of Notes set to minimise change in WAL from existing Class A Notes n Class A1(F) Notes final maturity in 2027 n Class A2 (F) Notes final maturity in 2024 n Class A1(V) and A2(V) Notes have a final maturity date as follows: n Class A1 (V) Notes final maturity in 2027 n Class A2 (V) Notes final maturity in 2025 n Class A1 (V) and A2(V) Notes will be subject to mandatory prepayment to the extent of Excess Cash up to a target (expected) profile with amortisation payments to be made at par n Where there is insufficient cash on a particular payment date to pay the target amortisation no default would occur, and any voluntary payment of that amortisation at a later date would be subject to the voluntary prepayment as set out below n Contractual amortisation of Class M3 Notes profiled to target a 1.2x cash DSCR with a bullet repayment at maturity n Amortisation to commence only once Class A Notes have been repaid in full n Class M3 Notes final maturity in 2028 n No contractual amortisation of Class B4 Notes n Class B4 Notes final maturity in 2029
Prepayments	n Excess Cash within the Punch A Securitisation (after paying or providing for expected costs and expenses, retention of a £15m cash reserve and payment of the service fee (if any)) to be applied as mandatory prepayment of Class A1(V) and A2(V) notes at par up to the target amortisation schedule and thereafter retained for future senior debt service, purchase of Class A notes in the market or applied as voluntary prepayment of amortisation as per the waterfall: n first, to prepay Class A Notes; n second, to prepay Class M3 Notes; and n third, to prepay Class B4 Notes n Voluntary prepayments of Class A Notes will be made at modified Spens (G+100bps) n Class M3 and B4 notes to have a 3 year non-call period from closing with any voluntary redemption at par thereafter (provided that the Class A Notes have been fully repaid)
Coupons	n Coupon on Class A1 Notes to remain unchanged at 7.274% n Coupon on Class A2 Notes to increase to 7.32% (to include quantum of financial guarantee fee, as described in the section entitled "Monoline financial guarantees") n Class M3 Notes carry a cash pay coupon of Libor + 4.50% n Class B4 Notes carry a cash pay coupon of Libor payable only on the original principal amount outstanding (as reduced by prepayments), and a PIK coupon of 11.00% n Class B4 Notes PIK coupon will be capitalised quarterly
Asset disposals	n Restrictions on asset disposals to be amended to allow the disposal of: n All non-core pubs; and n Up to 7% of core pubs per year, up to a maximum of 25% of all core pubs, to be tested by reference to EBITDA on the same basis as the current disposals test (but with existing cumulative limits to be reset from the date of the restructuring)
Capex	n Minimum capex required equivalent to £8,000 per core pub per annum and maximum of £17,500 per core pub, increasing annually in-line with CPI
Financial covenants	n Financial covenants tested quarterly on a rolling 4Q basis n FCF DSCR covenant set at 1.0x n Tested based on last 4Q interest payable and last 3Q + 1Q forward scheduled amortisation (excluding any final bullet repayments on Class M3 and B4 Notes) n EBITDA ICR covenant set at 1.25x on day 1, stepping up to 1.70x in Q4-2022 (tested based on last 4Q) n Net senior leverage covenant set with 15% headroom to business plan EBITDA and projected net senior leverage n Net Worth financial covenant at £50 million
Outside payments	n No service fee payments where Class A net leverage (excluding hedge MtM) is above 4.0x n 2% of EBITDA per annum to be payable as a service fee to the Group once Class A net leverage is below 4.0x (excluding hedge MtM)
Monoline financial guarantees	n Financial guarantee on Class A2, M2 and B3 Notes to be released as a condition of the Punch A restructuring n Class A2 Notes coupon will be increased by 50bps (from 6.82% to 7.32%) n Ambac has agreed to contribute £12.5m in cash to the restructuring and has confirmed that it will not be entitled to any contractual make-whole payment (which would otherwise amount to circa £3.1 million) in respect of the early termination of the financial guarantee
Hedge contracts	n Hedges on cancelled Class M2 Notes to be reallocated to the new Class M3 Notes n c.£78.6 million notional of overhedge will be terminated at closing with resultant MtM being calculated and paid as a super senior loan amortising over 7 years n No other change to the notional profile and no change to the fixed / floating rates n Hedges on cancelled Class B3 and D1 Notes reallocated to the new Class B4 Notes without reporting n £14.4 million notional of overhedge will be terminated at closing with resultant MtM being calculated and paid as a super senior loan amortising over 7 years n No other change to the notional profile and no change to the fixed / floating rates n To prevent over hedging as a result of the prepayment or early redemption of the Class M3 Notes and / or the Class B4 Notes, hedges will be partially terminated pro rata to the extent of overhedging n Entry into new hedges permitted, to the extent of any under hedging n Day 1 counterparty rating requirement of BBB+ n No ongoing hedge rating requirement n Actual MtM on day 1 Class M3 and B4 hedge termination and notional of super senior loan to be calculated at transaction close but estimated in the region of c.£30.4m
Liquidity facility	n Liquidity facility commitment resized at transaction close to £155.5 million to cover Class A Notes 18 months peak principal and interest (excluding any final maturity bullet repayments on the Class A Notes and target amortisation payments on the Class A(V) Notes), Class M3 Notes 18 months estimated peak interest and Class B4 Notes 18 months cash pay interest calculated as at the closing date n Sub-limit of liquidity facility commitment for Class M3 Notes and B4 Notes capped at c.£42.8 million (calculated as amounts available to cover amounts referenced above) n Sub-limit of liquidity facility committed for Class B4 Notes capped at c.£1.9 million (calculated as amounts available to cover amounts referenced above) n Amount capable of being drawn equal to the lower of the relevant total commitment and actual next 18 months principal and interest (in the case of the Class A Notes) and / or interest (in the case of the Class M3 and B4 Notes) for the relevant class of notes n Rating triggers reduced to BBB n Liquidity facility commitments (including sub-limits) resized on a quarterly basis
Security and subordination	n Class A Notes benefit from full security and covenant package n New Class M3 Notes subordinated to Class A Notes and benefit from full security and covenant package n New Class B4 Notes subordinated to Class A and Class M3 Notes and have no security or covenant protection (save as referred to below) n New Class B4 Notes have a share pledge over Punch A equity that can be enforced upon breach of the 1.0x FCF DSCR covenant or insolvency of Borrower (subject to below) n Ability to enforce subject to receipt of opinion no material degrouping charges in excess of a predetermined level as a result of enforcement and the Class A notes have been accelerated
Ambac contribution	n Ambac has agreed to contribute £12.5m in cash to the restructuring and has confirmed that it will not be entitled to any contractual make-whole payment (which would otherwise amount to circa £3.1 million) in respect of the early termination of the financial guarantee
Voting fee	n 10bps voting fee payable to any noteholder who votes on the transaction (either in favour or against) n Payment of the fee will be conditional upon the implementation of the transaction (Punch A and Punch B)
Board Observer	n Independent observer may be appointed by senior noteholders to the Board of the Borrower
Interconditio-nality	n Punch Taverns plc's commitment to apply Group resources which would be necessary for the restructuring to go ahead is conditional on the approval of the restructuring by all classes of Punch A and Punch B securitisation noteholders
Weighted average life (WAL) extension of Notes	Current WAL n Class A1: 5.1 yrs n Class A2: 3.7 yrs n Class M3: N/A n Class B4: N/A	New legal WAL n Class A1(F): 8.9 yrs n Class A1(V): 4.7 yrs n Class A2(F): 6.5 yrs n Class A2(V): 4.7 yrs n Class M3: 14.7 yrs n Class B4: 15.8 yrs

PROPOSED AMENDEMENTS TO THE TERMS OF THE PUNCH B SECURITISATION:

Overview	n c.£54.0 million Punch B cash used to pay down Class A8 Notes at par and pay break costs associated with the Class A8 hedge n Class A3, A6 and A7 Notes fully reinstated n Amortisation on Class A Notes reprofiled to target 1.2x FCF DSCR and final maturity set to minimise change in WAL n Class B1, B2 and C1 Notes extinguished for a mix of c.£52.3 million of PGE and Punch B available cash resources at a discount and c.£112.5 million of new Class B3 Notes n Financial guarantee on Class A7 Notes to be removed as a condition of the restructuring n c.£6.4 million of new A6 notes issued as payment for crystallised MtM on partial termination of the Class C1 hedge
Day 1 cash paydown	n c.£54.0 million of Punch B available cash resources used to pay down c.£44.9 million outstanding Class A8 Notes at par and pay break costs of c.£9.1 million associated with the Class A8 hedge n c.£52.0 million of PGE available cash resources and c.£0.3 million of Punch B available cash resources used to cancel junior notes at a discount to par n c.£16.0 million used to cancel c.31.0% of Class B1 Notes at 84.0% of par n c.£25.6 million used to cancel c.31.0% of Class B2 Notes at 83.0% of par n c.£10.7 million used to cancel c.35.0% of Class C1 Notes at 26.0% of par
Class A Notes	n 100% of Class A3, A6 and A7 Notes reinstated n c.£6.4 million of new Class A6 Notes issued as payment for crystallised MtM on Class C1 notes overhedge at transaction close n Further details of the maturity and amortisation of the Class A Notes are set out in "Amortisation and maturity", below
New Class B3 Notes	n c.£112.5 million of new Class B3 Notes to be issued n Remaining Class B and C Noteholders following day 1 cash pay down exchanged into new Class B3 Notes at the following prices: n Class B1 Notes: 84.0% of par as new Class B3 Notes n Class B2 Notes: 83.0% of par as new Class B3 Notes n Class C1 Notes: 26.0% of par as new Class B3 Notes
Class B and C Notes cash and new Class B3 Notes allocations per £1,000 nominal value	Class of Notes Up-front Cash Payment Allocation of New Class B3 Notes Total Class B1 £260 £580 £840 Class B2 £257 £573 £830 Class C1 £91 £169 £260
Amortisation and maturity	n Contractual amortisation of Class A3, A6 and A7 Notes reprofiled to target a 1.2x cash DSCR, with final maturity dates for each class of Notes set to minimise change in WAL from existing Class A Notes n Class A3 Notes final maturity in 2020 n Class A6 Notes final maturity in 2021 n Class A7 Notes final maturity in 2025 n No contractual amortisation of Class B3 Notes n Class B3 Notes final maturity in 2029
Prepayments	n Excess Cash within the Punch B Securitisation (after paying or providing for costs and expenses, retention of a £10 million cash reserve and payment of service fee (if any)) to be retained for future senior debt service, purchase of senior notes in the market or used as voluntary prepayment of amortisation as per the waterfall: n First, to prepay amortisation on Class A3 Notes, Class A6 Notes and Class A7 Notes; and n Second, to prepay amortisation on Class B3 Notes n Voluntary prepayment of Class A Notes will be paid at modified Spens (G+100bps)
Coupons	n Coupon on Class A3 Notes unchanged at 7.369% n Coupon on Class A6 Notes unchanged at 5.943% n Coupon on Class A7 Notes increased to 5.267% (to include quantum of current financial guarantee fee, as described in the section entitled "Monoline financial guarantees") n Class B3 Notes carry a cash pay coupon of Libor+4.00% payable only on the original principal amount outstanding (as reduced by prepayments) and a PIK coupon of 2.50% n Class B3 Notes PIK coupon will be capitalised quarterly
Asset disposals	n Restrictions on asset disposals to be amended to allow the disposal of: n All non-core pubs; and n Up to 7% of core pubs per year, up to a maximum of 25% of all core pubs, to be tested by reference to EBITDA on the same basis as the current disposals test (but with existing cumulative limits to be reset from the date of the restructuring)
Capex	n Minimum capex required equivalent to £8,000 per core pub per annum and maximum of £17,500 per core pub, increasing annually in-line with CPI
Financial covenants	n Financial covenants tested quarterly on a rolling 4Q basis n FCF DSCR covenant set at 1.0x n Tested based on last 4Q interest payable and last 3Q + 1Q forward scheduled amortisation (excluding any final bullet repayments on Class A and B3 Notes) n EBITDA ICR covenant set at 1.25x on day 1, stepping up to 1.70x in Q4-2022 (tested based on last 4Q) n Net senior leverage covenant set with 15% headroom to business plan EBITDA and projected net senior leverage n Net Worth financial covenant at £50 million
Outside payments	n No service fee payments where Class A net leverage (excluding hedge MtM) is above 4.0x n 2% of EBITDA per annum to be payable as a service fee to the Group once Class A net leverage is below 4.0x (excluding hedge MtM)
Monoline financial guarantees	n Financial guarantee on Class A7 to be released as a condition of the Punch B restructuring in consideration for an uplift in the coupon on the remaining Class A7 Notes in an amount equal to 0.50%
Hedge contracts	n Class A8 hedge is to be terminated in full and estimated hedge MtM of c.£9.1 million of Class A8 hedge to be crystallised and paid at closing n Class C1 hedge: n Existing Class C1 hedge to be reallocated to new Class B3 Notes n Current hedge notional of £125.0 million to be reduced to c.£112.5 million to eliminate over-hedge and profile shortened to 2029 n Estimated MtM of c.£6.4 million on cancelled portion of Class C1 hedge to be extinguished in return for new Class A6 Notes issued at par n Actual MtM at closing on Class A8 hedge termination and notional amount of new Class A6 Notes to be issued in respect of cancelled portion of Class C1 hedge to be calculated at transaction close, but estimated to be c.£15.5 million
Liquidity facility	n Liquidity facility commitment resized at transaction close to c.£101.9 million to cover Class A Notes 18 months peak principal and interest (excluding final maturity bullet repayments) and Class B3 Notes next 18 months cash pay interest calculated at closing n Sub-limit of liquidity facility for Class B3 Notes capped at c.£7.9 million (calculated as amounts available to cover amounts referenced above) n Amount capable of being drawn equal to the lower of the relevant total commitment and actual next 18 months interest and principal (in respect of the Class A Notes) and interest only (in respect of the Class B Notes) for the relevant class of notes n Rating triggers to reduce to BBB
Security and covenants	n Reinstated Class A Notes to benefit from full security and covenants n New Class B3 Notes subordinated to Class A Notes and have no security or covenant protection (save as referred to below) n New Class B3 Notes have a share pledge over Punch B equity that can be enforced upon breach of the 1.0x FCF DSCR covenant or insolvency of Borrower (subject to below) n Ability to enforce subject to receipt of opinion no material degrouping charges in excess of a pre determined level as a result of enforcement and the Class A notes have been accelerated
Voting fee	n 10bps voting fee payable to any noteholder who votes on the transaction (either in favour or against) n Payment of the fee will be conditional upon the implementation of the transaction (Punch A and Punch B)
Board Observer	n Independent observer may be appointed by senior noteholders to the Board of the Borrower
Interconditio-nality	n Punch Taverns plc's commitment to apply Group resources which would be necessary for the restructuring to go ahead is conditional on the approval of the restructuring by all classes of Punch A and Punch B securitisation noteholders
Weighted average life (WAL) extension of Notes	Current WAL n Class A3: 4.9 yrs n Class A6: 7.6 yrs n Class A7: 8.5 yrs n Class A8: 11.3 yrs n Class B3: N/A	New legal WAL n Class A3: 5.2 yrs n Class A6: 7.7 yrs n Class A7: 8.1 yrs n Class A8: N/A n Class B3: 15.8 yrs

Tabulation and Exchange Agent:

Deutsche Bank AG, London Branch has been appointed as the Tabulation and Exchange Agent (the "Tabulation and Exchange Agent") in relation to the consent solicitation process. For assistance with respect to the procedures for participating in the noteholder consent process, or to request a copy of the consent solicitation circular, noteholders are advised to contact the Tabulation and Exchange Agent whose details are set out below.

Deutsche Bank AG, London Branch

Winchester House

1 Great Winchester Street

London EC2N 2DB

[e-mail]

Tel: [phone]

Disclaimer

This announcement is not intended to and does not constitute or form part of any offer to sell or invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the restructuring proposals set out herein or otherwise, nor shall it (or the fact of its distribution) form the basis of, or be relied on in connection with, any contract therefor or be considered a recommendation that any investor should subscribe for or purchase or invest in any securities.

The securities referred to herein (including those proposed to be issued pursuant to the restructuring proposals set out herein) have not been and will not be registered under the U.S. Securities Act of 1933 as amended (the "Securities Act") or under any U.S. state securities laws and may not be offered or sold within the United States unless any such securities are registered under the Securities Act or an exemption from the registration requirements of the Securities Act and any applicable state laws is available.

This announcement contains certain statements about the future outlook for the Punch group that are or may constitute "forward-looking statements".  Because such statements are inherently subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.  As a result, you should not rely on any of these forward-looking statements. Any forward-looking statements included in this announcement are made only as of the date of this announcement, and except as otherwise required by law, we undertake no obligation to publicly update or revise any such forward-looking statements to reflect subsequent events or circumstances.

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