Taylor Wimpey to meet holders of its £450m Eurobond debt

Taylor Wimpey (TW) has bit the bullet at last and conceded that it needs to talk to the holders of its publicly-traded Eurobonds which account for £450m of its total £1.7bn of debts.

The house builders had spread the message that the holders were untraceable, which in turn led to the possibility that they were wanting to take a hard line and push the group into administration or receivership.

The reality is quite the opposite. The holders have been waiting for a call from TW.

“The company previously thought it didn’t need to talk but now sees that there is no choice,” said a source.

The news comes as TW reports other progress in its battle to sort out its debt facilities ahead of the deadline date of 9 February 2009 – the house builder’s next “test date”.

New terms with lending banks and some of TW’s bond-holders are being negotiated. If successful they would extend the maturity date through to 2012, giving TW some breathing space to trade through the present credit crisis.

The crucial element, however, has been the question of the publicly traded Eurobonds. They are currently trading at just 47% of face value.

The Financial Times today reports of good news on this front, revealing that an investment bank is co-ordinating a group of leading Eurobond investors.

The good news for TW is the FT’s revelation that: “The group is expected to take a consensual and constructive approach to talks.

“To get lenders’ support, a refinancing is likely to offer lenders a fee and an increase in the margin paid on their debt.”

The deal being draw up presently will allow for some cash to be set aside to pay down some of the bond debt, according to one source quoted in the FT.

The fine line that creditors have been treading relates to the group’s pension scheme, or more specifically its £377m deficit.

If creditors pushed TW into receivership, that deficit would be re-calculated under a more stringent set of accountancy criteria which would send the shortfall figure soaring to £1.2bn.

Not only that, but if TW became a company in receivership then the pension scheme payment would assume a position as senior creditor causing debt holders to line up behind it to share in what was left.