© The Financial Times Ltd 2016 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
April 1, 2009 11:43 pm
Taylor Wimpey, the housebuilder, has struck a deal with a group of its main creditors, bringing close to completion long-running talks to restructure its debt and securing greater certainty over its future.
The approval on Tuesday from the eurobond holders gives the company the support of leading members of its three classes of debt for a restructuring. This will ease the pressure from its debt load but hand creditors warrants to subscribe to 5 per cent of stock, according to people close to the situation.
However, the deal encourages Taylor Wimpey to raise about £300m in additional capital, otherwise the cost of its debt will start to increase again from 2010.
Moreover, the company is awaiting approval from the lending banks’ credit committees, as well as from 75 per cent of holders of its eurobonds. But it has already won the support of main holders of its bank debt and private placement notes plus about 70 per cent of the eurobond holders.
The agreement was with holders of its bonds due in 2012 and 2019, advancing the complex negotiations with more than 50 lenders for 10 months, since a failed capital raising last summer. Taylor Wimpey declined to comment.
The debt-stricken housebuilder was running out of time on a deferral of a covenant test, to expire on March 31. That standstill agreement has been extended for a third time.
The company holds £1.55bn in net debt, largely built up as a result of acquiring George Wimpey in 2007. Creditors include a consortium of 15 banks, 27 holders of private placement notes and about a dozen holders of eurobonds.
The refinancing would see Taylor Wimpey move to debt covenants based on its cash flow and gearing rather than on its earnings before interest, tax, depreciation and amortisation. That covenant is seen as challenging, given the state of the UK housing market: most other housebuilders have moved to cash flow-based covenants.
As part of the new deal with lenders, banks will reduce an undrawn revolving credit facility – akin to an overdraft – by about £200m.
The easing of the debt terms means the company has to increase the margin of interest paid on unsecured bank debt, private placement notes and bonds. The three creditor groups will share a pot of warrants that will give them the right to subscribe in cash to 5 per cent of the company’s shares at par.
Additional reporting by David Fickling
Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.
Sign up for email briefings to stay up to date on topics you are interested in