Taylor Wimpey: delays in debt restructuring

TaylorWimpey’s share price slid 4% to 35p yesterday, triggering the housebuilder to issue a statement to the Stock Exchange which sought to address worries that its debt providers might be set to walk away.

TaylorWimpey’s update reveals that discussions with its debt providers will take longer than thought. The result of this is that the deadline previously put on the resolution of this issue - late 2008 - has been rubbed out. 

“The co-ordinating banks have indicated that it is their intention to agree to replace the current covenants with a revised set of covenants which are more appropriate to the current market environment,” says the housebuilder.

“In the current environment, securing a comprehensive financing structure that is robust under all reasonable downside scenarios is essential.

“The board has decided to extend the current discussions with debt providers to include Eurobond holders, which will prolong the negotiation process.  As a consequence, it is now likely that a revised covenant structure will be concluded early next year”.

TaylorWimpey says that it will provide a further update on current trading in an interim management statement during November 2008

It concludes: “The group remains in compliance with its existing covenant package and has adequate facilities available.”