Housebuilder issues City statement announcing planned rights issue after 'significant downturn in the market'

Taylor Wimpey has announced plans to write down its landbank by an estimated £660m.

In a statement to the City ahead of a trading update on Wednesday, the housebuilder also announced it had agreed a relaxation of its banking arrangements and that it planned to carry out a rights issue.

The company said the measures were needed after what it called a “significant downturn in the market” since the start of the year.

Writedowns will be £550m in the UK, £70m in the US and £40m in Spain.

In relation to the banking arrangements, it has agreed a suspension of the interest cover covenant in favour of one linked to cash flow, which is conditional on a rights issue.

It said: “We have instigated discussions with our shareholders and other institutions regarding raising additional financing, which would most likely be via a placing or open offer.”