Punch Taverns, the embattled pub operator, narrowly avoided an embarrassing setback today as shareholders voted in favour of its plans for a £375 million share issue - just.

Britain's biggest pub company, which needs the cash to meet repayments on its £4.4 billion debt mountain, announced that it had received approval from 75.1 per cent of shareholders who voted, just enough to meet the required 75 per cent level.

It is understood that two hedge funds, Greenlight Capital and QVT Financial, voted their combined holding of 13 per cent against the resolutions relating to the placing and open offer in protest at the resulting dilution.

The dissenting shareholders are said to have wanted Punch to launch a smaller, less dilutive share issue and continue to sell pubs to meet its debt repayments.

A source close to the process said that part of the problem was that a significant number of Punch shares are held through contracts for difference, which prevents the controlling party from voting. As a result, only 53 per cent of eligible votes were cast.

A spokesman for Punch said: “In determining the size of the offer we had to balance the views of all our shareholders."

Punch said that existing shareholders would take up 49 per cent of the offer with the balance of the issue being placed with mainly UK-based institutions. It will issue 187.5 million shares at 100p, equating to 58 per cent of the enlarged group's share capital.

Punch will use the proceeds to pay off the convertible bonds that mature next year as well as some of its other debt, most of which is securitised and trading at well below face value.

Analysts suggested that the group could buy back at least £900 million of debt this year, having already redeemed £404 million at a discount of 36 per cent to face value.

Shares of Punch added 1p to 101p in morning trading.

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