Housebuilder may seek fresh capital as it parts ways with deal adviser Morgan Stanley

Crest Nicholson’s 24 banks have begun thrashing out the terms of a refinancing deal for its £500m debt-pile that could see fresh capital injected into the housebuilder.

The move follows the ditching of a plan to sell the bank-owned company to the listed bid vehicle of former Pizza Express boss Hugh Osmond after a recent dip in the housing market.

Building understands that Crest could part ways with deal adviser Morgan Stanley as soon as next week, a sign that any takeover is effectively dead.

A source close to the process said “a whole raft of options” was on the table, including a capital injection from institutional investors or private equity. “The market is not fantastic right now but there are dialogues with potential investors.”

The source added that it was hoped the banks could agree an outline deal as soon as next month. “The banks will spend some time hammering out the terms of the deal, selling it internally and trying to move it forward. In terms of completing the deal, optimistically Crest is looking at a couple of months; realistically it will be Christmas.”

It is understood that Morgan Stanley has estimated Crest will be worth between £490m and £600m in three to four years if it refinances and becomes active in the land market, at which point the banks could exit.

The group of 24 banks took control of 90% of Crest last year after a £600m debt-for-equity swap that was brought about by the collapse of the UK housing market.

Talks with Osmond’s Horizon vehicle, which began in April, have stalled as the housebuilding market has been hit by fears of a double-dip recession and the drying up of funds from the Homes and Communities Agency.

It is understood Crest was seeking a sale price of close to £400m compared with an offer of about £335m from Horizon.

Crest Nicholson declined to comment.

So near, yet so far

April: Horizon confirms interest in Crest. Rivals including Galliford Try and Persimmon reported to be interested.

May: Crest asks Morgan Stanley to advise on sale. Unnamed trade buyers express frustration at exclusivity deal between Crest and Horizon. Crest boss Stephen Stone (pictured) updates the City on its numbers in preparation for possible listing.

July: Crest rebuffs £335m offer from Horizon and starts exploring other routes.