Ailing housebuilder Taylor Wimpey expects to secure breathing space from lenders over its £1.9 billion debts before the end of the year.

The group said it was making progress on talks with lenders to agree a deferral of a test on its banking covenants, due at the end of this year.

Taylor Wimpey has already said that it is likely to fail the test in January if it cannot strike a deal, but said today the negotiations were "close to completion".

The UK's biggest housebuilder is restructuring its balance sheet under a process due to be completed early next year.
It added it would announce the results of the talks before its annual results.

"We are confident that a robust, stable and medium term financing solution for the group, which takes into account the requirements of all relevant stakeholders, will be achieved prior to the announcement of our preliminary results," said Taylor Wimpey.

A leaked memo from chief executive Peter Redfern last week had said the company had enjoyed "very productive" recent talks with lenders.

But any deal could reportedly see banks taking an equity stake in the company as a sweetener, the report said.

The company - formed from the £5 billion merger between Taylor Woodrow and George Wimpey last year - was thrown out of the FTSE 250 on Monday after a 95% fall in its share price over the past year.

It was ejected from the top tier in March as the woes in the sector first began to take their toll.  Taylor Wimpey revealed in August that it racked up a mammoth £1.54 billion in losses for the first six months of the year.

It has shed almost 2,000 staff in the UK this year and been hit by housing market troubles on both sides of the Atlantic. The dramatic dive into the red came after writing off £586 million from its UK land portfolio and more than £816 million linked to goodwill from last year's merger.