The management and leading lenders to Crest Nicholson have put their support behind a debt-restructuring plan that would involve lenders taking control of the business.

Leading lenders have put forward to a wider syndicate of lenders for approval a proposal for a debt restructuring under which the company’s £1bn of debt would be about halved.

In exchange for such a writedown, lenders would share a majority stake in the business. That plan has the support of leading seniorranking lenders as well as the management, say people close to the situation.

The lenders would share about 90%of the equity in the emerging company, with the remaining 10% given to the management. Members of the senior bank group would end up holding the largest stakes, with the wider lender group holding smaller stakes, one of the people said.

Talks are ongoing, however, in particular to secure support from some of the most junior-ranking creditors.

Crest Nicholson became a private company in May 2007, when it was acquired by Castle BidCo – a joint venture between HBOS and West Coast Capital, led by Scottish entrepreneur Sir Tom Hunter.

Financial Times