Taylor Wimpey confirmed this morning that it is in talks with shareholders and other institutions about raising additional financing through a placing and open offer, and announced it expects to carry out massive writedowns.
The housebuilder said in a statement it has agreed to amend the terms of its revolving credit facility with its banks, conditional on it raising additional equity.
The company also said it is reviewing the carrying value of its inventories in the light of current market conditions and said it expects to write down the value of the land bank and work in progress in the UK by some £550m, in the US by some £70m and in Spain by some £40m.
Reports at the weekend said Taylor Wimpey was close to announcing a cash injection of up to £500m from top institutional shareholders to help it repair its balance sheet.
Taylor Wimpey said in the statement that it remains within the terms of its banking covenants, but in light of current market conditions and to protect against the risk of further deterioration, it has agreed to amend the terms of the revolving credit facility.
The company said this includes suspending the covenant based on net interest in relation to EBITA, which it believes is not appropriate in the current market conditions, in favour of one based on operating cash flow.
The company also said has significantly restructed its UK operations, which will substantially help reduce its overhead.
The company said it expects that putting in place an appropriate financial structure will help it withstand the sustained weak UK market and provide a base for future growth.
Story supplied by MoneyAM
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