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Redrow has dismissed claims that the refinancing deal agreed with its banks this week will loosen its grip on the business.

On Tuesday, the housebuilder announced a new 拢450m debt facility that runs until 2011. This will tie lending covenants more closely to cash flow than profit as a precaution during the downturn.

Some City analysts have said a reliance on cash flow will lead to housebuilders aggressively discounting the price of their homes to ensure a flow of cash. Alastair Stewart at Dresdner Kleinwort said it may force homes to be sold at a loss.

David Arnold, Redrow鈥檚 finance director, played down claims that the banks were now in the driving seat. 鈥淎t the end of the day, the industry survives on cash flow and what we need is a stable market. The banks have not got us by the short and curlies.鈥�

As part of the deal, Redrow said 2.25 percentage points would be added to its annual interest charge, which would take the figure from 拢16.1m to 拢22.3m.

Turnover at the housebuilder in the 12 months to 30 June 2008 fell 22%, from 拢834.3m to 拢650.1m, and the group fell 拢194m into the red after land writedowns of 拢259.4m. Before this exceptional cost, pre-tax profit fell 46%, from 拢121.1m to 拢65.5m.

Sales fell 19%, from 4,823 to 3,925 units, and the company鈥檚 withdrawal from the land market saw the number of plots fall 19%, from 20,200 to 16,450.

Neil Fitzsimmons, chief executive, hinted that the group had been more aggressive in writing down land than its rivals. It has assessed the value of about two-thirds of its landbank against the open market value of the land and the rest according to the normal measure of the profitability of each site.

He declined to comment on the intentions of hedge fund Toscafund, which has a 29% stake in the company. 鈥淵ou鈥檇 better ask it what its plans are. Any talks we have are confidential.鈥�