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The U.K.'s largest homebuilder, Taylor Wimpey plc, on Wednesday
warned it was in danger of breaching banking covenants next year after investors shunned an emergency share placing.
The product of a £5 billion ($9.96 billion) merger completed just before the housing market collapsed, Taylor Wimpey had Monday become the first U.K. homebuilder to announce an emergency share sale. The company wanted to raise about £500 million, and the group's banks had made the new capital a condition of changes to its banking covenants. But while the builder had secured part of the funding from existing investors, it was not able to place the full quota.
"In light of current market conditions, we have not been able to conclude a satisfactory transaction," Taylor Wimpey said. Without the changes to the agreements with its banks, the builder said, it may breach "one or more banking covenants at the first testing date in 2009," while insisting it is in "full compliance" with the covenants at the moment. Taylor Wimpey's shares had plunged 53% to 28 pence by noon in London Wednesday, giving the group a market value of £292.9 million. That's less than a fifth of the £1.7 billion net debt it had at the end of June. - Laura Board See the full story on TheDeal.com See related: Taylor Wimpey to raise equity See related: Taylor Woodrow, George Wimpey to merge Categories Deal Video
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