Punch Taverns appoints chief executive

Punch Taverns, the heavily indebted pub group, has turned to food retailer Duncan Garrood to revive its fortunes after more than a year of painful restructuring that has seen its estate shrink to 3,500 properties and its share price fall 73 per cent.

Mr Garrood, currently head of the food division at Kuwait-based franchise operator MH Alshaya, will join Punch by June 15 as chief executive, a position that has been empty since January 2013.

When he joins, executive chairman Stephen Billingham will revert to non-executive chairman.

Before joining Alshaya in 2009, Mr Garrood was commercial director of BAA, the airport operator.

Mr Billingham said Punch "scanned the world" during the four-month search for the chief executive. "We didn't exclude people in the pub sector but we wanted to bring in someone with new ideas and different experience."

Last October Punch completed a two-year process to restructure its £2.3bn of debt, a deal that cut the amount owed to £1.6bn and left the bondholders in charge of 85 per cent of the equity after a heavy dilution of existing shareholders.

It lowered the company's ratio of net debt to earnings before interest, tax, depreciation and amortisation - a measurement of leverage - from nearly 11 times to 7.7 times.

Punch was highly leveraged in the early 2000s as it sought rapid expansion of its estate, a situation that left it heavily exposed when the smoking ban, beer duties and the global downturn hit the pub industry.

In October it announced it intended to offload nearly 900 "non-core" pubs - small, drink-led outlets with low average net income that are vulnerable to long-term decline in drinking habits. It has transferred 116 pubs to the core estate.

But in November, the group suffered another blow when MPs surprised the industry by calling time on the 400-year-old beer tie that requires some landlords to buy supplies from the companies that own their pubs.

Punch's share price hit a three-year high of 330p in January last year before falling to a more than decade low of 87.25p on Monday. In afternoon trade on Tuesday it was up 8.3 per cent at 94.50p.

Mr Billingham said Mr Garrood's challenge would be to take the company forward in light of the impending changes in the beer tie rules. "It's a question of how we respond to the changed landscape," he said. "It's clear that some of the investments that have a payback of more than five years, will not go ahead."

The number of pubs in the UK has fallen from nearly 60,000 12 years ago to about 48,000.

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