Housebuilder announces deal with lenders to defer covenant testing date
Taylor Wimpey has announced that it has reached an agreement with its banks to defer the date on which its covenants are tested. TW was on track to breach its covenant with lenders on 1 January, following financial difficulties. The firm is now expected to report on compliance with the covenants by 31 March 2009.
Taylor Wimpey's share price has dropped dramatically over the past year, as the housebuilding sector has suffered in the economic downturn. However, an internal email sent by Pete Redfern, Taylor Wimpey’s chief executive, to staff earlier this month on the progress of its talks with banks boosted expectations of a refinancing deal.
A statement issued by the company admitted: 'Without this deferral it is likely that we would have been in breach of our interest cover covenants in January 2009 under the original testing schedule'.
Taylor Wimpey will continue discussions with its banks with a view to creating a stable financing solution for the company. A further trading statement is expected on 13 January.