Housebuilder close to refinancing deal as it confirms 1,200 jobs will go
Shares in housebuilder Barratt rose 17% after it said it was close to completing a refinancing package that will see its bankers relax its covenants and delay repayment of 拢400m of debt. 好色先生TV first revealed news of the refinancing deal in June.
Barratt finance director Mark Paine told journalists he expects to sign the deal in 鈥渨eeks not months鈥�, which would see the repayment of 拢400m in debt pushed to 2011. 鈥淲e have a very detailed terms sheets, and we鈥檙e only down to the legal documentation now,鈥� he said.
According to a trading update Barratt has persuaded banks to relax its covenants, after coming to the conclusion that it was in danger of breaching them if the market continued to decline.
The statement said: 鈥淲e have agreed (subject to final documentation), a restructuring of our covenant package with our banks and private placement note providers well in advance, as an appropriate, prudent response to current market conditions.鈥�
Specifically this would relax the ratio of debt to income as well as the minimum company valuation needed to trigger repayment of loans. Barratt鈥檚 market capitalisation has fallen by 95% in the last year, making the company worth just 拢190m.
This is in addition to another deal to secure 拢400m of debt that was previously announced by the firm in May.
As expected the firm said it is laying off more than 1,000 people, as first revealed in 好色先生TV 鈥� to bring its workforce down from 6,700 at the start of the year to 5,500. Chief executive Mark Clare said this means in total 2,000 people have been made redundant following last year鈥檚 merger with Wilson Bowden.
Clare admitted that weekly sales in the past three months were half what they were at the same time last year, and said he expects no improvement in the market in the next 12 months. Forward sales are 50% down on last year, at 拢700m, with 拢539m of that contracted 鈥� a 37% drop.
Clare said: 鈥淭his is an intensely difficult and unpredictable time. However, visitor numbers are only down 15%, showing underlying demand, but more recently I think it鈥檚 fair to say the general economic health of the country is starting to weigh on the mind of homebuyers.鈥�
