Shares in struggling housebuilder Taylor Wimpey climbed more than 20 per cent yesterday after the housebuilder was said to be nearing a deal to restructure its £1.55?billion debt burden.
The company, formed by the 2007 merger of the former Solihull-based Taylor Woodrow and George Wimpey, has agreed a deal with one of its three main groups of creditors – holders of its eurobonds – giving them warrants allowing them to subscribe for five per cent of its shares.
Agreement with eurobond holders – which account for around a third of its debts – comes after support from its main bank lenders and holders of private loan notes.
But under the terms of the deal, Taylor Wimpey – which declined to comment –is likely to have to raise £300?million in new capital – because the cost of its debt burden will begin to rise again next year.
The company was formed at the height of the housing boom but has been crippled by the credit crunch and a plunging property market.
The company said it expects to formally conclude debt negotiations during this month, with lending terms based on measures such as cashflow and reducing borrowings rather than its underlying earnings. It has delayed a crucial test of its lending covenants until the conclusion of the restructuring, when it will publish what are set to be grim annual results.
At the half-year stage in 2008, the business posted a loss of £1.54?billion after slashing the value of its land bank by £586?million, as well as writing off more than £800?million in goodwill following the merger.