Punch Taverns, the embattled pub company, will make a further dent in its £5 billion debt mountain after selling 11 of its top pubs to Greene King, the Abbot Ale and IPA brewer, for £30.4 million.

The deal, announced this morning, follows a string of disposals in recent weeks to a number of regional brewers, including Fuller, Smith & Turner, Shepherd Neame, Frederic Robinson, JW Lees, Charles Wells and Adnams.

Punch is expected to use the proceeds to continue buying back its debt, which due to the group's high-profile problems is trading at a significant discount to face value.

Douglas Jack, a leisure analyst at Numis Securities, said that, based on recent repurchases, the company should be able to pay down debt of more than £50 million.

Although the pubs are being sold at a small discount to the £32.7 million book value, using the money to buy back debt cheaply would make the disposal earnings enhancing.

The pubs it is selling to Greene King are all freehold managed houses, generating combined operating profits last year of £3.55 million. Seven are in London, including the Bunch of Grapes in Knightsbridge, with four in Scotland, including the Burnbrae in Bearsden, near Glasgow.

Greene King recently raised £207.5 million through a rights issue, money which it said it would use to pay down debt and fund selective acquisitions.

Punch, which still has more than 8,000 pubs, had until recently been selling only its bottom-end pubs, hoisting a 'for sale' sign over 500 of its smaller tenanted and leased premises.

But in March, in order to accelerate the process, Giles Thorley, the Punch chief executive, appointed Sapient Corporate Finance, a boutique advisory firm, to make discreet approaches to regional brewers to ask them whether they would be interested in buying small packages of its top-end pubs.

In the 35 weeks to April 29, it completed £91 million of disposals, since when it has sold 13 pubs to Shepherd Neame for £14.9 million and now 11 pubs to Greene King for £30.4 million. Including sales of bottom-end tenancies, the total for the financial year so far is likely to be at least £150 million.

Since the last year end, the group has reduced gross debt by £318 million, at a cost of £203 million. The reduction, helped by the decision to scrap dividends, puts it in a strong position to pay off the convertible bond that matures in 2010, leaving £209 million outstanding.

Punch, like the wider pub and brewing industry, has been assaulted by a cocktail of woes in the past 18 months or so, including the smoking ban, the consumer spending crisis, the credit crunch, cheap beer sales by supermarkets and big rises in duty.

The Punch share price has been savaged in the past 18 months amid growing fears over its ability to avoid defaulting on its debt, hitting a low of 32.25p in March.

But since then, the disposal process and a slightly improved trading outlook have reignited hopes that it will survive. In morning trading, the shares were up 1.75p at 158.5p.

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