Barratt 'needs £1bn to survive'

Barratt’s plight is so severe that it is expected by City analysts to have to resort to a debt-for-equity swap.

A rights issued had been mooted earlier as an escape route, but the never-ending collapse in Barratt’s share price has block off that less painful option.

Housebuilders have seen £4.2bn knocked off the value of their share prices since January alone.

The Daily Telegraph lists the falls for the year so far:

• Barratt- shares down 80%
• Taylor Wimpey – shares down 68%
• Persimmon – shares down 52%
• Redrow – shares down 49%

Dresdner Kleinwort withdrew its target price on Barratt in a note titled: “Don’t buy [at any price]”

Alastair Stewart, analyst at stockbroker Dresdner, told the paper that with debts of more than £1.7bn, Barratt needs to raise at least £1bn to survive.

The Guardian said that Barratt suffered the heaviest falls after analysts said the collapse in house sales, married to the firm’s mountain of debt, meant it was unable to put a reasonable value on the business.

Barratt bought Wilson Bowden for £2.2bn at the height of the cycle, a deal it may come to regret.

David Wilson, the wily seller, still hasn’t been fully paid and a source said a further £100m is due shortly. That won’t Barratt’s sums any easier to solve.