Midland pub group Punch Taverns has admitted it was moving closer to defaulting on its debt after posting a fall in sales
Burton-based Punch cited the impact of wet weather and an ongoing asset review after revenue was down six per cent to £491.7 million.
Punch, which spun off its better-performing managed-pubs division Spirit Pub last year to cut a £3 billion debt built up before the economic downturn, reported a pre-tax profit for the year to August 18 of £64 million, down 16 per cent on the year before.
Chief executive Roger Whiteside said: "We have delivered profits for the year in line with our expectations and are on track with our disposal programme in extracting maximum value from our non-core assets."
But Punch said the cost of servicing its £2.1 billion debt was hurting business and that it was in discussions with shareholders over a restructuring.
"While the options are complex and will take time to conclude we are confident that a consensual restructuring can be successfully implemented in a manner that delivers value for stakeholders," the company said.
Punch, which plans to sell about 2,000 underperforming pubs of a total 5,000 over five years, said average net income per pub had declined 3.7 per cent in its core estate and that it would focus on rising food sales to buck the trend.
Tenanted pubs, which are run by publicans who pay the company rent and rely on it for beer supplies, have not fared as well as managed pubs against a tough economic backdrop as they generally have less leeway on pricing and promotional activity.
Spirit Pub last week posted full-year sales at managed pubs up 4.8 percent and said it was working to strengthen its brands to offset the impact of increases in beer duty, wages and rising commodity and energy costs.
Shares in Punch Taverns, which had traded more than £11 in 2007, closed at 6p on Tuesday, valuing the company at around £40 million.
