Login to UKBP
Commercial Property News
Taylor Wimpey cash call rejected by major shareholders forces shares to crash.
Shares in Taylor Wimpey lost almost half their value today after the UK’s largest housebuilder by volume said that it had failed to secure a cash injection to repair its balance sheet. The Finance Director Peter Johnson has resigned.
Taylor Wimpey Chief Executive Pete Redfern said he was confident of raising capital in the near future but acknowledged it was difficult due to market conditions.
The capital would help secure renewed terms with lenders which the company has warned it needs to avoid breaching banking covenants in early 2009.
"We have got a significant period of time to complete the (fund) raising, we don't see covenant breaches or cash shortages during 2008," he told reporters in a conference call. "And we don't rule out any funding options."
One lender to the group said he had not heard that Taylor Wimpey was looking for a refinancing, saying that it probably needed some short-term money now as a major refinancing looked extremely difficult.
"I would not be happy to refinance a house builder today at any price," a second lender to Taylor Wimpey said.
Taylor Wimpey had become the first UK housebuilder to be forced into a rights issue to raise capital following a £660million loss on the value of its property.
Taylor Wimpey’s inability to raise about £500million from potential and existing shareholders contains a particularly worrying message for UK companies. This is not the first fundraising to fail, but it is a vivid reminder that investors feel no duty to support every company seeking cash. Instead, knowing that other calls on their money are likely, they will not automatically pay up to help companies that are struggling.
The housebuilder said it will be writing down the value of its UK property by £550million. It also plans to cut the value of its US property and Spanish property portfolios by £70million and £40million respectively.
Taylor Wimpey has struggled over the past year as the credit crunch has taken hold. The housebuilding industry has seen sales and prices fall and with no sign of increased mortgage availability, challenging times look set to continue over the rest of the year.
Taylor Wimpey is the first of the four big housebuilders to attempt to raise capital through a rights issue but it is also the first of these four to give a trading update. Trading updates from Persimmion, Redrow and Barratt are due in the coming weeks.
"It is now a question of survival for the company and there may be some brinkmanship going on between the management and its owners, but the bottom line is this remains one of if not the weakest player in this market," Landsbanki analyst Simon Brown said in a note.
"Our concerns over the net debt at Taylor Wimpey have been borne out with the £1.7 billion at the half year, far higher than anticipated."
Taylor Wimpey Chief Executive Pete Redfern said he was confident of raising capital in the near future but acknowledged it was difficult due to market conditions.
The capital would help secure renewed terms with lenders which the company has warned it needs to avoid breaching banking covenants in early 2009.
"We have got a significant period of time to complete the (fund) raising, we don't see covenant breaches or cash shortages during 2008," he told reporters in a conference call. "And we don't rule out any funding options."
One lender to the group said he had not heard that Taylor Wimpey was looking for a refinancing, saying that it probably needed some short-term money now as a major refinancing looked extremely difficult.
"I would not be happy to refinance a house builder today at any price," a second lender to Taylor Wimpey said.
Taylor Wimpey had become the first UK housebuilder to be forced into a rights issue to raise capital following a £660million loss on the value of its property.
Taylor Wimpey’s inability to raise about £500million from potential and existing shareholders contains a particularly worrying message for UK companies. This is not the first fundraising to fail, but it is a vivid reminder that investors feel no duty to support every company seeking cash. Instead, knowing that other calls on their money are likely, they will not automatically pay up to help companies that are struggling.
The housebuilder said it will be writing down the value of its UK property by £550million. It also plans to cut the value of its US property and Spanish property portfolios by £70million and £40million respectively.
Taylor Wimpey has struggled over the past year as the credit crunch has taken hold. The housebuilding industry has seen sales and prices fall and with no sign of increased mortgage availability, challenging times look set to continue over the rest of the year.
Taylor Wimpey is the first of the four big housebuilders to attempt to raise capital through a rights issue but it is also the first of these four to give a trading update. Trading updates from Persimmion, Redrow and Barratt are due in the coming weeks.
"It is now a question of survival for the company and there may be some brinkmanship going on between the management and its owners, but the bottom line is this remains one of if not the weakest player in this market," Landsbanki analyst Simon Brown said in a note.
"Our concerns over the net debt at Taylor Wimpey have been borne out with the £1.7 billion at the half year, far higher than anticipated."
Wed, 2nd Jul 2008