Enterprise Inns' expected take-over of Unique Pub Group should tighten up the latter's outstanding bonds from their current record levels, say pub sector analysts. The take-over is slated to happen next year when Enterprise's option on Unique's equity comes into play. London-based analysts covering the pub sector say Enterprise is planning to exercise the option. The option on Unique's equity will be triggered in January next year.
Unique's single-A paper was trading at 80 basis points over gilts and its triple-Bs were at 145 over as of last Tuesday. Steven Behr, credit analyst for structured bonds at Royal Bank of Scotland, says the merger will give the new entity more buying power, permitting it to purchase beer cheaper. In addition, the company will have greater diversity in its pub portfolio, making the potential poor performance of a few pubs less of an issue to the outstanding bonds. Combined Enterprise and Unique will own roughly 9,300 pubs.
Markus Niemeier, a whole business securitization analyst at Barclays Capital, says Unique's outstanding bonds will be unaffected in the event of a take-over--meaning they will continue to be secured upon Unique's own portfolio. Further tightening from the already out performing paper is also possible, he says.