The two
biggest pubcos in the land, Punch Taverns and Enterprise Inns, have seen more
than 70% wiped off the value of their shares. Dividends have been cancelled and
concerns expressed as to their long term viability. So what happens? The chief
executives of the two firms have collected long term incentive awards of
£1.17m. Incentives for failure, presumably? Both bosses have laden the chains
with debt, careless of the future.
Nils
Pratley (Guardian 10.12.08) comments, “Punch is an extreme example of the pub industry’s
love affair with debt and financial complexity in recent years. The biggest six
quoted operators are carrying borrowings of £14bn between them. The stockmarket
ascribes a combined equity value to these companies of just £2.4bn …The MPs
correctly called the use of debt ‘reckless’…they are right to be concerned: the
economics of the pub industry are crazy.”
