Chief executive dismisses reports that lenders will take a slice of the company as he warns of further writedowns

Taylor Wimpey chief executive Pete Redfern has confirmed there will be no debt-for-equity swap with its lenders as a condition of its debt negotiations, as revealed by Building last week.

At a trading update this morning, Redfern said the option was never seriously explored.

A swap would have seen lenders take a slice of the housebuilder in return for agreeing to refinance its £1.55bn debt pile.

He said: “It's not on the cards and has not been discussed.”

According to a source close to the talks, lenders will receive warrants, which entitle holders to buy shares at a future date at a specified price. The source dismissed fears that the issue of more shares in the form of warrants could dilute the current value of Taylor Wimpey's equity.

“The diluting effect will certainly be less than 10%,” the source said, adding: “The warrants are purely a sweetener for lenders. There is absolutely no desire from any of the banks to take a stake in the company.”

Talks with its bank over refinancing its debt facilities are still in progress, the firm said in today's trading update. A decision is expected by 31 March, when a deferral period for a covenant test comes to an end.

The group has total debt facilities available of £2.7bn, with a year-end net debt of around £1.55bn.

The housebuilder also warned in today's trading update that it will take further provisions against its land and work in progress, saying that the “absence of any improvement to market conditions” is forcing it to take further action.

The firm said it completed 13,394 homes in 2008, down from 20,790 the previous year. Average selling prices were £171,000, down from £188,000 in 2007.

Net private reservations for the second half of 2008 were also down – averaging around 137 per week, compared with 225 over the same period the previous year.

The year-end order book stood at 4,231 homes, a 17% drop from 5,109 homes at the end of 2007.

Sales in North America were also down on the first half of 2008, but the board said it expected some respite in 2009 as actions from the US government begin to affect the market.

The firm said the housing market in Spain remains weak and that plans to pull out of Gibraltar are on track.

The board welcomed the recent reduction in interest rates but said the outlook for the UK housing market remains bleak.

It said: “We remain of the view that there will not be a recovery in the UK housing market in the short term. Whilst we welcome the recent reductions in interest rates, the availability of mortgage finance remains severely restricted and, together with increasing economic uncertainty, continues to have a detrimental impact on consumer confidence.”