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'FEARS OF COLLAPSE' AT TAYLOR WIMPEY

Redfern is confident the cash can be raised

Thursday July 3,2008

By Andrew Johnson, Associate City Editor

TAYLOR Wimpey shares plummeted more than 40 per cent yesterday amid fears the failure of a £500million rescue fundraising had left it at risk of collapse.

Stock in Britain’s biggest housebuilder plunged 25p to 35p on concerns it will breach banking agreements over £1.7billion debts. The company is now worth just £369million.

The drop was accompanied by the departure of finance director Peter Johnson, a miserable trading update and plans to axe 900 jobs.

The half-year dividend has been scrapped, with the company warning the UK market will not recover in the short term.
Other housebuilders plunged, with Barratt Developments — facing its own funding worries — the hardest hit.

Dresdner Kleinwort analyst Alastair Stewart said: “We belive there is a very real danger the company could collapse.”

Landsbanki analyst Simon Brown agreed, saying Taylor Wimpey “could go bust if the market gets a lot worse”. The company had been looking to raise cash from a mix of existing and new investors.

Chief executive Peter Redfern said he was “very confident” the funds could be raised before February when the debts fall due. He also expected the banks to renegotiate convenants.

“Our existing investors were very supportive but the new investors wanted more time because of the bad house market data and stock market sentiment,” said Redfern. “We are still in talks.”

The company is also looking to sell parts of its land bank, now valued at £3.2billion after a £660million write-off earlier this week. Redfern said further writedowns might be needed if house prices fell more than 10 per cent.

Another possibility is a takeover. City talk suggested private equity groups and hedge funds were “sniffing around”. One source said a consolidator might emerge. Others said greater market stability was needed before any deals could be struck.