Housebuilder relies on temporary banking deal after £6.4m interim loss and failure to raise £5m on stock exchange

The future of Oakdene has been called into question after it breached its banking covenants this week.

It also failed to raise £5m through a share placement and dropped more than £6m into the red for the first six months of 2008.

It is currently relying on a temporary bank deal from its lenders.

Auditor UHY Hacker Young said: “This position (covenant breach) indicates the existence of a material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern.”

The group said it had placed 8,987,108 of the 10 million shares it had planned to and was seeking legal advice about its position.

It is thought one or more investors got cold feet because shares were being offered at 50p despite the fact Oakdene’s share had fallen steadily to 17p yesterday.

The price plummeted to 7p today at news of the breach.

Oakdene is there but for the grace of its banks it seems

Kevin Cammack

By way of a sweetener it had offered warrants with each share – or options to buy at 50p at a future date.

One City analyst said: “It clearly wasn’t enough. The share price has been heading south for a few weeks now and someone has obviously got pulled out.”

Its loss of £6.4m in the first half of 2008 followed land writedowns of £7m.

Turnover was down 41% from £18.9m to £11m.

The company said: “In common with most housebuilders Oakdene has suffered from the effects of the turmoil in the global markets which has led to a shortage of mortgage availability.”

In relation to the likelihood of agreeing a covenant deal with its banks, it said: “Discussions around future banking terms are ongoing with our bankers. We are extremely grateful for their support to date and we are seeking to reach agreement on future support shortly.”

Kaupthing analyst Kevin Cammack said: “Oakdene is there but for the grace of its banks it seems.”