JD Wetherspoons, the UK pub giant, has cut its dividend and will reduce capital expenditure in order to save money for a loan repayment.

The company made the decision because it has a US$140m (£100m) loan from the beleaguered Royal Bank of Scotland to renew in September and fears it may not be able to.

Wetherspoon said in a statement: “In the light of current uncertainty in the credit markets, the board has decided to substantially reduce capital expenditure on new openings and to cancel future dividend payments in order to ensure the repayment of the private placement from cash flow and existing facilities.

“In normal conditions, a refinancing of the private placement on attractive terms could be relied upon, given our financial performance. However, in the present economic climate, a refinancing cannot be taken for granted and the board therefore feels that the measures described above are prudent in the circumstances.”

Wetherspoon has seen a 6.4 per cent increase in total company sales for the first two weeks of the year, but expect its half year results to be down on last year.

The company, which has seen its offer of Greene King IPA at a 99p a pint bring in customers so far this year, expects the six months ending 25 January to be down 1 per cent on the same period last year.

The six-week Christmas period saw like for like sales increase 3.7 per cent.