Taylor Wimpey's lenders agree to waiver of covenant deadline

Taylor Wimpey goes into the New Year with a sigh of relief, having successfully put its pressing financial issues on the back-burner.

During the Christmas break, TW announced on the Stock Exchange that it has reached agreement with the providers of its bank facilities and its private placement noteholders “to defer the testing date of certain financial covenants”.

The upshot is that, thanks to this deferral, the house builder will not be required to test these covenants based on the 2008 year end figures “or be required to report on the company's compliance with them” until 31 March 2009.  

But the house builder is still not safely into the home straight as there is the prospect of TW possibly failing to clear the hurdle even at the end of March.

“Without this deferral and as previously indicated, it is likely that we would have been in breach of our interest cover covenants in January 2009 under the original testing schedule for the year to 31 December 2008,” said the group.

It added: “Discussions with our debt providers continue on a constructive basis.”

The challenge, however, is still to achieve a “robust, stable medium term financing solution which takes into account the requirements of all relevant stakeholders.”

TW reckons it will land a deal before the end of this deferral period. 

The group plans to shed further light on the current state of the housing market by way of a trading statement which is scheduled for 13 January 2009.

There will be an update on the progress of the financing discussions on the same day.