Barratt has come under increased pressure from its lenders to raise cash through a rights issue in the wake of Taylor Wimpey鈥檚 success in raising 拢510m last week
According to a source close to Barratt鈥檚 banks, they want a cash injection of at least 拢300m to shore up the housebuilder鈥檚 balance sheet, which has about 拢1.42bn of debt on it.
The source said: 鈥淥bviously it鈥檚 the company鈥檚 choice, but the recent equity issuances from Taylor Wimpey and Travis Perkins have put added pressure on Barratt to move quicker rather than slower.鈥�
Speculation over the rights issue has intensified in recent weeks, with City analysts saying the company may take advantage of improved sentiment towards housebuilders.
The source said the company was waiting for its share price to increase so it could raise proportionately more cash and minimise the dilutive effect of issuing new shares.
There have reportedly been a series of meetings with lenders and shareholders about a possible cash call since it refinanced last July. It is thought that it would wait for a share price of about 240p before any rights issue, but this is likely to have fallen after the Taylor Wimpey move. The company鈥檚 share price on Wednesday morning was 150p.
Mark Clare, Barratt鈥檚 chief executive, ruled out an imminent rights issue at a trading update on Wednesday but said it was a consideration in the longer term.
He said: 鈥淭here are no plans. But if the market continues to improve, who knows? If there comes a point when there are big opportunities, we need to look at options.鈥�
Barratt鈥檚 first 19 weeks of 2009
- Net reservations 0.47 per week per site, up 4.4% on the same period last year and up 20.5% compared with the six months to 31 December 2008
- Visitor levels down 6%
vCancellation rates down to 16%, compared with 25.7% in 2008 - Forward order book 拢778.2m (5,253 plots), up from 拢455.8m (3,529 plots) on 1 January 2009.
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