With the US subprime crisis spreading to Europe, shockwaves in Northern Rock which would spread to other banks, UK economy growth not looking healthy, increasing trade deficits, sharply rising mortgage costs, falling corporate profits and job cuts especially in the City, and as market turmoils escalates, housing price which shows a first drop of 2.6% (from Rightmove last month), this are the signs of the beginning of a housing crash. PROPERTY SHARES ARE A SELL!

looking very grim for BDEV, they are in horrible position with huge debts and falling sales, I would think it would be over a year before I could consider a contrarian purchase in this sector. I will look for the Golden Cross and continue to monitor and research the sector.

I have been making small purchases in the bank sector with LLOY and looking at RBS, but hesitating for now because it feels like they could go lower, dragged further down by the housing sector.

Thanks for the reference, dealerdear.


Plight of Barratt and Taylor Wimpey deepens as shares fall more than 20pc
By David Litterick
Last Updated: 10:49am BST 11/06/2008


The plight of Barratt Developments worsened this morning after shares fell a further 25pc to just 68.25p as fears mounted that the housebuilder's woes are so severe that it will have to resort to a debt-for-equity swap to stand a chance of survival.

Taylor Wimpey also fell by 20pc to 52p, after a flurry of negative coverage saying that the company would also have to raise capital to try and repair its struggling balance sheet. Both companies now have net debt which far exceeds their market value.

Barratt shares have tumbled 85pc since the beginning of 2008, while Taylor Wimpey has fallen 74pc.

Shares in the rest of the sector were hit this morning, but to a lesser extent.

There are fears many housebuilders will now be forced into drastic writedowns in the value of their land banks

The share price falls follow a bad day for housebuilder's yesterday, when Barratt saw its shares slump 29 to 91p after brokers said there was no end in sight to the collapse in the housing market.

In a savage note, Dresdner Kleinwort withdrew its target price on Barratt in a note titled: "Don't buy [at any price]."

Barratt was not alone in feeling the pain. Persimmon shares tumbled 41 to 387p and Taylor Wimpey slumped 12 to 65p.

If a builder goes under what effect that will have on a bank sp I don't know.

Apart from that analysts are becoming very +ve about RBS. Another one on CNBC a few moments ago saying good things.

is there any likelyhood of BDEV being suspended followwing a near 50% drop in SP in two day? do they have to issue an RNS?[possibly not because their woes are inn public domain already]

Providing they don't go bust anyone care to speculate a buy-in point with a view for long-term recovery. people are always going to need new houses

please feel free to comment.

Alex

Alex.

My take is this as I'm watching very carefully. B&B were apparently told by the FSA they didn't have to update the market immediately about their profit warning until they had the secured the input of cash. Otherwise the FSA knew there would be a run on the bank similar to NRK. I can only think the builders have been told the same. There is probably a hell of a lot of activity going on behind the scenes between builders, M King and the government. The trouble today is everything is interlinked. If a builder goes bankrupt then the market may fall rapidly which could have a knock on effect on banks. As RBS and HBOS are only trading just above their rights prices, any severe fall would IMO mean resignations from both sets of boards. Probably at this very moment some of the builders are refinancing. I tried trading BDEV and gave up. I wouldn't stay in them. Their shares may be worthless. IMHO big news will break in the next day or so.

You can almost sense the fear in the market. It is as though we are all waiting for something to happen whch is why nearly all other companies are being ignored and most traders, based on the posts here, have given up!

robert - I remember in the 80's the Company got into trading difficulties and they had to call back Laurie Barrett out of retirement to sort the mess out. From memory, I think it was the Kuwait Investment Office that took a large stake at the time for longer term recovery and the shares duly obliged. I personally would steer clear of this situation since any recovery plan may well dilute existing shareholders' interests, with banks in a position to squeeze a hard deal for themselves if there is a debt for equity swop. Once any dilution has taken place and assuming the shares remain listed, a share purchase could then be considered. All imho of course.

dealer, I am not sure they have given up, it is more a case of keeping a low profile! I think thats what they call it anyway.

There was nobody on here that i saw at 7am apart from cynic and myself! There didn't even appear to be any 'staff' to sort out the lack of RNS news.

Starting to feel like 'nobby no mates'. I've taken to talking to the cat ..

... even he crapped on me as well ..

Thanks for your input guys
I have no intention of buying.
too many risks/unknowns to factor in and definitely too high risk for me.
I was just seeing if anyone was feeling brave and risk buying in for a long term recovery play, but looks like we were all in agreement atm.

Alex

Poor old BDEV .

Statement re: Market Speculation (Barratt Developments)




RNS Number : 5014W
Barratt Developments PLC
11 June 2008


Wednesday 11th June 2008


Statement re: Market Speculation


Responding to continuing market speculation Barratt Developments is today confirming the
guidance for its full year ending 30 June 2008
given to the market at its Interim Management Statement made on 14 May 2008.

The company remains comfortable with market consensus forecasts for completions numbers
(18,300) and profit before tax and exceptional
charges (395m).

The Group continues to operate within its 2.6bn of committed facilities and its banking
covenants. Given anticipated completion
numbers, net debt at the end of June is expected to be approximately 1.7bn in line with
previous guidance.

Based on the review of site margins at the time of the IMS, we continue to expect the
requirement for development provisions (often
referred to as land write downs) in the current year will be limited. Once year-end numbers
are confirmed and a detailed review of the
company's 600 developments is completed with our Auditors, the company will provide a full
update.

The Group's Trading Update is scheduled for 10 July.

that seemed to stop the rot

Not for long I guess. It's a good time to reduce loss or get a quick profit.

A statement does not change the net debt or financial situation.

hlyeo98
You still on rift.

no, not on rift but ive and mrp as penny shares

hlyeo98
Can you put the rift web link in the header on the rift thread its on the last post. Cheers.

HOW THE GIANTS HAVE FARED SO FAR...

PERSIMMON

Pretax profit, 2007: £ 582.7m
Landbank: 89,987 plots
Houses sold, 2007: 15,905
Net debt: £ 1 billion
Market value today: £ 1.2 billion
Market value at peak: £ 4.6 billion


BARRATT DEVELOPMENTS

Pretax profit, 2007: £ 427.8m
Landbank: 109,700 plots
Houses sold, 2007: 17,168
Net debt: £ 1.7 billion
Market value today: £ 299.9m
Market value at peak: £ 4.4 billion


TAYLOR WIMPEY

Pretax loss, 2007: £ 19.5m
Landbank: 86,155 plots
Houses sold, 2007: 14,862 (UK)
Net debt: £ 1.9 billion
Market value today: £ 744.2m
Market value at peak: £ 5.5 billion

Its Bleak House for builders as property prices tumble and their share values collapse
- John Waples and Matthew Goodman

Two years ago Mark Clare was riding high. He was a director at Centrica and cited as a future chief executive of the 11 billion energy group.

Then he received a phone call from a headhunter to ask if he was interested in becoming chief executive of Barratt, one of the countrys biggest housebuilders. It didnt take much persuasion and in October 2006 he was in the new job.

Housebuilding was not a sector he knew about, but after dealing with the thousands of complaints he received when he ran Centricas residential energy business he did know how to manage a business and deal with difficult customers.

Clare, 51, was also a man in a hurry. Just a few months after he joined Barratt, he was negotiating one of the industrys biggest takeovers when he bought the rival builder Wilson Bowden for 2.2 billion in a deal principally financed by debt.

His acquisition propelled the company into the FTSE 100 and Clare was running his own show, ranked among the elite of Britains top businessmen.

It was to prove a short reign. Six months after the deal was completed, the mortgage bank Northern Rock owned up to its financial difficulties. It gave the first hints of cracks in the housing market and signalled that the good times were over.

As a precaution, Clare dusted off a file at Barratts headquarters. The company had almost gone bust in the last housing crash in the early 1990s and had kept the DIY manual of how to survive a recession.

Clare opened it up, but little did he know how bad it was going to get. Since that time the groups share price has fallen 91% and the market value of the combined group has collapsed from 4.4 billion to 300m. At the same time its debts have remained stubbornly high at 1.7 billion and there are now serious questions about the companys future.

Clares career as a chief executive is probably over. Those shareholders who have stayed the course are incensed at the way he has gambled away Barratts legacy. For 20 years the company had studiously avoided mergers and acquisitions, but now, in just one deal, Clare has nearly destroyed the company.

How long Clare and his finance director Mark Pain remain at the company lies in the hands of their new chairman, Bob Lawson, who joined this month and has a reputation for rolling up his sleeves at operational level. As one investor put it: The answer is not very long.

Barratt is not alone. Taylor Wimpey, which was formed out of the merger of Taylor Woodrow and Wimpey, is in a similar mess. Its share price has collapsed by 82% and its value has fallen from 5.5 billion to 744m. That fall, usually seen only in high-risk technology and biotech stocks, has also cast doubt over the future of its chief executive, Peter Redfern.

A raft of other quoted builders, including Persimmon, which has pulled off a series of deals, are also facing challenging times. They are downgrading their profit forecasts as margins come under pressure and they build fewer homes. Many have stopped buying land.

Even the sectors most experienced operators, such as Tony Pidgley, chief executive of Berkeley Group, say it is the worst market they have experienced. He said: This market reminds me of the early 1970s. Its much worse than the 1990s. The downturn has been much quicker and sharper. In 1973, no sooner had you blinked, you were in a collapse.

Big redundancies are inevitable. In the last recession, in the early 1990s, it is estimated that about 500,000 people directly employed by the housebuilders lost their jobs. For the past decade the housebuilding sector has tried hard to repackage itself as a disciplined industry that is no longer characterised by boom and bust cycles. That claim has proved to be invalid. This cycle has proved yet again that the best leaders of housebuilders are entrepreneurial founders who can predict trends. That is why the best ones, like Steve Morgan of Redrow and Alan Cherry of Countryside Properties, sold out in the past few years.