| CATEGORY: NEWS AND ANNOUNCEMENTS SECTOR: TRAVEL & LEISURE |
Enterprise Inns lifted by REIT proposal |
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Fri 28 Mar 2008
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LONDON (SHARECAST) - New plans to aid a possible conversion to REIT status outweighed a gloomy statement on trading to send shares in pub group Enterprise Inns soaring.
Enterprise has postponed the £750m refinancing of its Unique freehold pub estate because of the current volatility in debt markets, but added it is to set up a new company that will take over the estate through an intermediate lease on arm's length terms. This structure will help it convert to a REIT in the future, it added, as well as improving its appeal to bond investors.
"We believe that the enhanced structure which we are proposing will be preferred by both bondholders and ratings agencies," the company said in a statement.
Previous plans to split off the Unique freehold portfolio, which consists of 3,500 properties bought from the Unique Pub group in 2004, struggled over the issue of control and operation of supply contracts. Under today's proposals, the supply contracts will be run by the newly incorporated operating company.
Enterprise added that that results were in line with last year, but added consumer confidence is low and trading conditions continue to be difficult.
"EBITDA remains broadly in line with the pro-forma EBITDA reported in our 2007 interim results. Trading conditions continue to be difficult, with the smoking ban having a particularly adverse impact on pubs that are predominantly wet led," it said, adding that consumer confidence is low and, for most people, disposable income is under pressure.
Enterprise added it is offering support through rent concessions and special discount schemes to assist licensees who are genuinely struggling.
The group also slammed the government's recent duty hikes on alcohol as "punitive and ill conceived" and which will hit responsible pub goers and do nothing to help improve do nothing to anti social behaviour and binge drinking.
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