Housebuilder quashes speculation about plans to ask investors for cash in the immediate future

Housebuilder Barratt has denied it has any imminent plans to ask investors for cash via a rights issue.

Speaking this morning at the company's trading update for the first 19 weeks of 2009, chief executive Mark Clare said he was focused only on “managing the company within the current constraints”.

Mark Clare
Clare: focused only on “managing the company within the current constraints”

Speculation that Barratt would do a rights issue has intensified in recent weeks after Taylor Wimpey raised £510m from investors. It is thought the company would take advantage of improved sentiment towards housebuilders since January and get near the front of the queue of construction-related stocks asking investors for cash. This week Travis Perkins and Marshalls have both done rights issues.

Clare said: “There are no current plans. Taylor Wimpey was a different situation because there was a requirement to raise equity as part of the refinancing deal.”

But he conceded such a move might become necessary in future. “In the longer term if the market continues to improve, then who knows? If there comes a point when there are big investment opportunities for us then you need to look at alternatives.”

The company said there had been “early signs of stability” in the market since the start of the year.

“Over time, it is hoped that the measures introduced to increase mortgage lending will provide additional support to the market. However, volumes are currently at low levels, mortgage finance remains constrained and visibility is limited. We therefore remain cautious as to near term trading prospects.”

It said it expected to continue to comply with its banking covenants based on “current trading and detailed forecasts”.

Since January

  • Net reservations – 0.47 per week per site, up 4.4% on the same period last year and up 20.5% compared with the six months to 31 December 2008
  • Visitor levels – down 6%
  • Cancellation rates – down to 16%, compared with 25.7% in 2008
  • Forward order book – £778.2m (5,253 plots), up from £455.8m (3,529 plots) on 1 January 2009.