Punch Taverns aims to raise £350m

Punch says it is cautious in the near term

UK pub owner Punch Taverns, which last week sold 11 pubs to Greene King, says it is looking to raise £350m ($571m) through a shares issue.

Punch is the UK's largest pub chain but it has heavy debts, which last autumn were put at £4.5bn.

The firm said it would use part of the money raised to purchase its outstanding convertible bonds.

Punch also said it should meet its financial expectations for the year, but that it remained cautious.

"While we are confident of the longer-term expectations of the group and our expectations for the full-year remain unchanged, we remain very cautious over the near-term due to the lack of forward visibility on trading outlook," the company said.

Punch shares closed at 148.5 pence on Friday, having fallen by 64% in the past year.

Last year Punch said that to strengthen its business it wanted to sell about 500 less profitable pubs.

The company owns 8,300 pubs, included those leased to landlords and those it manages directly.

After the Greene King sale earlier in June, Punch said the cash raised would be used to reduce debt and reinvest in its estate

In May pub shares, including those of Punch, fell after MPs on the Business Select Committee called for the pub industry to be investigated over practices that may be forcing up drinks prices.

MPs want the Competition Commission to investigate arrangements that oblige pub tenants to take beer supplies only from their landlords.

Pub firms argue have that they need to have some hold over the running of their pubs, so that they can make a profit.