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DEBT DEAL ON HOLD AS WIMPEY LOSES £1.5BN

Taylor Wimpey is the UK's biggest housebuilder

Thursday August 28,2008

By Andrew Johnson

TAYLOR Wimpey yesterday thwarted hopes it would disclose a new debt deal with its banks as it plunged to a loss of £1.54billion for the first half of the year.

Instead, the UK’s biggest housebuilder warned it was likely to breach its £1.7billion debt conditions unless they were relaxed.

It saw no respite for the UK housing market in the short term and believed the crisis could last another 18 months.

Chief executive Peter Redfern said there was little the Government could do to kickstart the housing market.

“I don’t think the Government has a magic bullet,” he said. “As a company you have to be careful; if you start behaving as though the problem is someone else’s, then you lose focus on what you can do.”

Redfern was confident an agreement with lenders would be reached before the end of the year. “The process is under way,” he said. “We are in constructive talks with our lenders.”

Taylor Wimpey shares rose on Tuesday in the belief a debt deal would be announced yesterday. They fell 3.75p to 48bp when none came and amid disappointment with the company’s profits.

Underlying profits plummeted 96 per cent from nearly £120million to £4.3million but a series of huge exceptional write-offs sent the builder tumbling £1.54billion into the red.

They included a £690million writedown against the value of its land bank, up from the £660million flagged earlier this year. Taylor Wimpey has operations in the US and Spain, as well as the UK. All are suffering weak housing markets.

The company also made an £816million non-cash loss by writing off the entire value of its intangible assets. The company took a further £40million hit from axing 900 jobs and closing 13 of 39 regional offices earlier this year.

Redfern said no more major job cuts would be necessary at the moment.

The company sold 894 homes, a third down on last year, and saw average selling prices fall from £224,000 to £202,000.

Analysts said there were still too many negatives surrounding the company to recommend that investors buy.