Taylor Wimpey courted by private equity firm TDR?

Private equity firm TDR Capital is reported to be making overtures to Taylor Wimpey (TW) with a view to injecting cash – in exchange for a stake in the house builder’s shares.

Such a move would result in more new shares being issued and as a result TW’s existing shareholders would see the value of what they currently hold dropping still further.

The development has surfaced ahead of the meeting tomorrow between TW and its shareholders. It is thought to have been leaked to the press – The Mail on Sunday ran the story yesterday – by the private equity firm to pressurise TW management.

TW is also under shareholder pressure. Reuters has noted this morning that Taylor Wimpey shares are worth just 7% of their value at the start of the year.  

One analyst was sceptical about the mooted private equity deal.

“We’ve heard this sort of stuff before,” he said. “Barratt was about to permit venture capitalists to inject much-needed funds, according to one rumour, but nothing ever happened.

“And it’s the second time we’ve heard that Taylor Wimpey is in this place.

“There are many private equity groups out there looking for opportunities, even today, but up to now they have not offered prices that managements found acceptable.”

The pressure on TW is to renegotiate terms with its various £1.7bn debt providers before 7 February 2009.

That sum divides between:

• £870m of bank debt
• £450m of traded Eurobonds
• £380m of private placements – another form of lending but one which is not publicly tradable.

There is considerable uncertainty relating to the £200m-worth of short-dated Eurobonds. There are a further £250m-worth of Eurobonds with an expiry date of February 2019.

However last week it emerged that these various Eurobond holders, far from being untraceable and hostile to the group, are sitting waiting for TW to invite them in for talks.

“Tomorrow is a bit too early for TW to say it has got all its refinancing in place, but it has a new finance director and that means things can accelerated,” said the source

“I think there is the off chance that TW could be announcing that it has reached a solution by the end of December.”