Taylor Wimpey To Confirm GBP500m Refinancing Deal

Mon, 30 Jun 2008

Taylor Wimpey Plc, the UK's second largest housebuilder, is to receive a £500m loan from institutional shareholders "to keep the business afloat amid the lowest house sales levels since the 1970s", according to reports by the Daily Telegraph.

The company will today confirm that it is in talks with its major shareholders, which include Standard Life, Legal and General, Alliance Bernstein, Barclays, Scottish Widows and M&G Group, to raise the cash in an emergency fund-raising.

Wimpey is expected to make a more detailed announcement on the refinancing deal in its half-year trading update on Wednesday, when it is also likely to state that it has reached an agreement with its lenders regarding its banking covenants.

Some analysts have predicted that the housebuilder could write down the value of its land holdings by up to £600m, putting the company in danger of breaking loan-to-value ratio rules on some of its loans .

The Telegraph reported that a decision to grant Taylor Wimpey a major cash injection could prompt other struggling housebuilders, such as Barratt, to follow suit.

However, Wimpey's rivals yesterday dampened speculation that they would use their scheduled trading updates during the next two weeks to make similar announcements.
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