Christopher Rickard, Taylor Wimpey鈥檚 new finance director, has an interesting few weeks ahead of him.
Against the backdrop of the government鈥檚 epochal intervention in the banking system, a game of poker began at the housebuilder this week.
On one side of the table are bondholders, which are owed a 拢450m slice of the housebuilder鈥檚 拢1.7bn debt. On the other are the banks, which have agreed to keep the company afloat by waiving covenants.
If covenants are breached, bondholders can demand their cash back early and scupper any deal. Some argue that there is already a breach given the fact the company鈥檚 bonds are no longer rated as investment grade.
As one analyst noted: 鈥淭he deal now comes down to whether there are any 鈥榟ooligans鈥 among the bondholders that want to cause trouble.鈥 As one source close to the talks euphemistically put it: 鈥淭hese things are never smooth.鈥 So would the banks buy out any unruly bondholders if it was the only way to get the deal done?
Bankers were understandably unwilling to show their hand but one informed observer said: 鈥淚f it came to it, they probably would.鈥
As the graph shows, all this uncertainty has done little for Taywimp鈥檚 share price over the past week and the stock is worth a tenth of what it was eight months ago. Some investors have clearly given up on it.
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Percentage share price fall over last week
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