Taylor Wimpey’s bankers have stepped up demands on the house builder for compensation for resetting its debt terms to avoid a breach of banking covenants in early 2009, seeking the option to take up equity in the company.
The firm also comfirmed it had held exploratory talks with private equity groups about injecting cash or taking a stake in the company.
The housebuilder needs its banks and other lenders to amend terms on its £1.9bn of net debt amid the worst housing slump in living memory. However, its new finance director admitted yesterday that it was unlikely to agree a deal with its lenders before breaching covenants in January.
The process to refinance the business, identified as a material uncertainty by Taylor Wimpey’s auditors in August, has been going on since it failed to raise £500m of fresh cash from existing and new shareholders in July.
Expectations had been that banks would revise Taylor Wimpey’s banking covenants on condition that they would receive much higher interest rates and a one-off arrangement fee.
That prospect faded yesterday when Chris Rickard, who joined the company as finance director last month, told analysts that a deal with banks had yet to be struck, and was unlikely to be finalised by January 1, when the covenants are tested.
Financial Times, The Times, Daily Telegraph, The Independent
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