Punch Taverns, the pub operator, narrowly avoided an embarrassing setback yesterday when investors voted in favour of its plans for a £375 million share issue — but only just.

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

It is understood that two American 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.

One analyst, who asked not be named, said: “Giles Thorley [the Punch chief executive] must be a relieved man. If shareholders had voted to reject the issue, his already shaky position would surely have become untenable.”

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

A person close to the process said that while 60 institutions had voted in favour of the issue, 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 company spokesman 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 being placed with mainly British-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 £275 million convertible bond that matures 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, mainly from the proceeds of pub disposals.

These proceeds, in the 40 weeks to the end of May, amounted to £171 million as it sold a mix of bottom-end tenancies and more than 50 of its top-end pubs.

Punch’s narrow victory in yesterday’s vote may cause jitters at Marston’s, which on Monday faces a shareholder vote over its own £176 million rights issue. Similar concerns on dilution have been voiced.

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