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Taylor Wimpey grasps the nettle

Created:
30 June 2008
Written by:
Claer Barrett

Taylor Wimpey has become the first of the big housebuilders to announce plans for a major financial restructuring after announcing expected write-downs totalling £660m on its land bank and work in progress.

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Some £550m of this relates to the UK, with another £70m ascribed to the US and £40m to Spain. It noted that there were some signs of stabilisation in the US, but said that the UK has entered "a significant downturn."

The company hopes to restructure the terms of its lending agreements to avoid breaching banking covenants, but this is dependent on fresh equity being raised from major shareholders and institutions. Details of a £500m placing are expected later this week.

See also: Housebuilders: to buy or not to buy? and Landslide!

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SHARE TIP UPDATE:

Sell

Now down 52 per cent on our original sell advice, Taylor Wimpey shares fell another 5 per cent today - not a great indicator of investor sentiment ahead of a placing - and we suspect they will fall further. Sell at 59p.

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