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BATTERED WIMPEY WRITES OFF £660M

BURDEN: But Redfern says the firm is complying with banking agreements

Tuesday July 1,2008

By Andrew Johnson, Associate City Editor

TAYLOR WIMPEY took a wrecking ball to the value of its land and announced write-offs totalling £660million yesterday as it confirmed fundraising plans.

The company, one of Britain’s biggest housebuilders, warned of a “significant downturn” in the UK housing market.

Its chief executive, Peter Redfern, insisted the firm was still within its banking agreements but had been forced to renegotiate the terms of one of its credit facilities.

Its statement turned the spotlight on rival housebuilders, in particular Barratt Developments which, like Taylor Wimpey, is labouring under a debt burden approaching £2billion.

Market insiders said Barratt was close to easing financing concerns with a possible land sale worth up to £350million, with rival Berkeley named as a potential buyer.

However, the speculation did not stop the company’s shares falling 5fp to 58p.

Analysts believe other housebuilders will also have to refinance.

Taylor Wimpey shares stayed flat at 62p as the City awaited details of plans to raise up to £500million from a placing and open offer with existing and new investors. These are expected when the company publishes a trading update on Wednesday.

Taylor Wimpey confirmed yesterday it had written down the value of land and houses being built in the UK by £550million.

It made further writedowns of £70million in the US and £40million in Spain. The figures are in addition to £280million in US and Spanish write-offs made last year.

The company said the US was showing signs of improvement, but the UK had worsened. “The board is moving to put in place an appropriate financial structure that will withstand what we expect will be a sustained weak market in the UK and provide a base for future growth,” it said.

Taylor Wimpey feels there may be opportunities if rivals remain enfeebled. It also believes it will gain from being the first to tap shareholders for money.