Barratt Secures Extension To Debt Repayment Deadline

Fri, 11 Jul 2008

Barratt Developments has reached an agreement with its lenders to delay the deadline for some of the company’s debt repayment until July 2011.

Under the original agreements with its bankers the house builder was due to pay back some of its £400m debt next April, but the company has now managed to persuade banks to adjust and relax its covenants.

In a trading update issued today, Barratt said it had agreed a revised covenant package and agreed upon a new £400m debt facility, to protect it from an increasingly unstable market.

The news follows the firm’s confirmation that 1,200 jobs will be lost as the property market continues to deteriorate. Barratt reported average private sales were down 43 per cent year-on-year for the past six months.

Barratt is hoping that its wider cost-cutting initiatives, which include lowering the cost of major materials and re-negotiating key sub-contractor rates, will result in annualised cost savings of £40m by the financial year 2008/2009.

The statement from Barratt said: "Given these challenging market conditions the group’s strategy is to focus on operating as effectively and efficiently as possible, whilst ensuring we remain well positioned to benefit from any market upturn."

"With the new financing package now in place, and the focus on de-leveraging the business, we believe we now have the structure to enable us to deliver through today’s challenging market."
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