Punch Taverns is in danger of breaching covenants on its debt next year and could be forced into a rights issue to raise cash, say analysts.

The warnings came as Punch chief executive Giles Thorley claimed that cuts in capital expenditure and the sale of non-core assets would allow the company to remain within its securitisation debt covenants this year.

However, analysts fear that Punch’s financing model could leave cash trapped in its securitisations, putting the pub group’s ability to pay back a £224m convertible bond that matures next year in doubt.

Daily Telegraph