Enterprise Inns, Britain’s second biggest pub company, has called a halt to all pub acquisitions and stepped up disposals in a bid to reduce a £1 billion debt facility due for renewal in 2011.

The company, which has almost 7,800 leased and tenanted pubs, today resisted the temptation to follow Punch Taverns in scrapping the final dividend, although analysts said that doubts remained over its ability to maintain future payouts.

Ted Tuppen, chief executive, refused to be drawn on the likely outcome, saying the company had until May next year to decide on its next dividend. He said that issues including trading and the wider financial climate would have a bearing on future dividend strategy.

The most pressing issue is a £1 billion debt facility held by a syndicate of 11 banks that expires in May 2011. Mr Tuppen said that he was halting all pub acquisitions, on which Enterprise normally spends £50 to £100 million a year, and would raise a similar sum by selling about 200 underperforming outlets.

“In these markets we consider it prudent to want to seek to reduce the outstanding amount of debt to a smaller figure,” he said.

Analysts are forecasting that the £1 billion debt will have been cut to £700 million by the time refinancing negotiations start.

Enterprise, which like its peers has seen its pubs hit by the smoking ban, duty, cheap supermarket beer, rising costs and dwindling consumer confidence, reported a 12.6 per cent fall in profits before tax and exceptionals to £263 million in the year to September 30, although a lower tax charge meant adjusted earnings per share fell by just 1 per cent to 39.2p.

The final dividend is maintained at 10.4p, bringing the total for the year up 3.8 per cent at 16.2p.

Mr Tuppen estimated that the average licensee’s earnings had fallen by about 6 per cent, and the company had provided £9.1 million in support, of which £2.7 million had been in rent concessions and £6.4 million in beer discounts. He said the figure this year would be “no less”.

He insisted that, despite pressure on its tenants, Enterprise’s business model was proving resilient. “Despite all the different things that have beset us, 82 per cent of our pubs on long-term substantive agreements have seen profits improve."

Enterprise’s results were issued as the Parliamentary Business and Enterprise Committee started hearing evidence on its inquiry into the relationship between so-called pubcos like Enterprise and Punch and their tenants.

Mr Tuppen said he was confident that the inquiry, which is reviewing how the pubcos have responded to the recommendations of the 2004 Trade and Industry Select Committee, would reaffirm the “clarity, transparency and fairness” of Enterprise’s dealings with its licensees.

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