BRITAIN'S second-biggest pubs owner Punch Taverns plans to raise about £250m in a refinancing deal to help fund further acquisitions.

Hartlepool's Pubmaster chain is believed to have received an approach from the group.

Sources close to Pubmaster confirmed the approach, but said it was still at an early stage.

The equity value of Pubmaster is estimated at £250m, but Punch would also have to take on the group's £1bn of debt.

Punch, and Pubmaster, are also believed to be a likely beneficiaries from Scottish and Newcastle's decision to sell off about 1,500 of its pubs, valued at about £2.3bn, despite neither of them making it to S&N's shortlist.

Analysts predict the companies could pick up the surplus pubs the winner of the auction may want to offload.

A city analyst said: "There could be as many as 500 surplus pubs up for grabs as the result of S&N's plans.

"Both Punch and Pubmaster are ideally placed to take an interest in those pubs, despite speculation about a possible merger of the two groups."

Punch has just completed its first year of trading since listing on the London Stock Exchange in May.

It said the refinancing deal would unify its debts into a single structure covering 4,300 of its pubs and simplifying administration.

Punch predicted the impact of its refinancing would be to increase its long-term borrowing capacity from £1.4bn to about £1.8bn, while creating additional funding for new purchases.

The Burton-on-Trent group also said trading had continued to be in line with management expectations, with like-for-like sales up 2.6 per cent in the full year compared with that reported for the first half.

Chief executive Giles Thorley said: "This has been a year of significant progress in which we have consolidated and improved our business both operationally and financially."

Punch said 539 pubs had benefited from investment in the year to August 23, while a further 283 pubs were acquired during the period.

Since it was formed by buying pubs from Bass in 1997, Punch has expanded in a spate of acquisitions, including the purchase of Inns Business Group from Allied Domecq in 1999.

The overall estate now totals 4,515 pubs, following the sale or delicensing of 70 others this year.

Punch said it had continued to expand its training programme for its retailers, with 716 delegates trained during the year.