Regent Inns, which said last month it has received a number of bid approaches following a profits warning, is to start selling begin selling non-core assets worth about £25 million in a bid to reduce its £80 million debt mountain.

Shares in the group eased 1.5p to 17.55p in morning trading and are now worth 84.3 per cent less than a peak of 118p in April last year.

The group announced today that it will not pay a dividend for the second year in a row after pre-tax profits plunged 63 per cent to £825,000 for the six months to December 29. Operating profits before exceptionals fell from £6.7 million to £4.4 million.

Regent Inns, which owns the Walkabout chain of Australian-themed pubs, the Jongleurs comedy clubs and Old Orleans restaurants, is now worth just £20.9 million but holds £80.6 million worth of debt which executive chairman, Bob Ivell, said would be cut by selling assets.

He said that eight freeholds with a book value of about £25 million would be sold on a sale and leasback basis in addition to "a couple" of unbranded pubs.

Mr Ivell said: "These measures will enable us to reduce borrowings substantially, which will be important should our banking arrangements come under pressure were there to be a prolonged period of difficult trading.”

Despite the recent collapse into administration of Sports Cafe Holdings and the Massive Pub Company, Mr Ivell insisted that Regent's banking covenants were not under threat.

Trading during the six months has been impacted by both a slowdown in consumer confidence, and therefore a reduction in people spending on nights out, and the knock-on effect of the smoking ban.

Like-for-like sales during the six months to December 29 fell by 3.8 per cent.

While the success of England at the Rugby World Cup gave a late boost to bar sales in October, market conditions deteriorated in November and October and by December, Mr Ivell said: "Celebrations in Walkabout appeared to be muted compared to last year, resulting in disappointing sales.”

However, Mr Ivell pointed out that Walkabout continued to achieve weekly sales per unit of about £35,000, which he said was well ahead of most rivals. He said its Cardiff Walkabout had taken £107,000 on Saturday as drinkers celebrated the surprise victory by Wales over England in the Six Nations.

Regent Inns confirmed last month that it had received a number of approaches for the business, understood to include Alchemy Partners, the private equity firm, and Novus Leisure, owner of the Tiger Tiger Brand. Mr Ivell said today that takeover discussions were still “ongoing”.

Analysts said that a takeover was now the best hope for investors. Greg Feehely, at Altium Securities, said: "The immediate trading outlook for Regent remains pretty grim. The best outlook for investors would be a competitive auction process."

Peter Backman, a foodservice market analyst at Horizons, said that although its Old Orleans restaurant chain was a brand that had been "crying out for revitalisation", the jury was still out on the impact of Regent's hefty investment programme.

"The fact it has traditionally been a drinks-led concept in a market where drinks sales are falling, makes it even tougher for Regent to modernise," he said. "Quality brands will continue to do well in this sector, but any brand that is starting to look jaded, will suffer the downturn more acutely.”

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