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Dave Spart

Times : Property Sector Seeks £1.17bn In Second Wave Of Fundraising

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They know full well we're experiencing a dead cat bounce so this might be their last chance to act before the second wave of the crash really kicks in.

Barratt Developments, Redrow and Liberty International all announced share issues today to bring down their debts and finance expansion in the second wave of fundraising to hit the sector.

Barratt Developments will raise £720.5 million through a placing and rights issue as part of a deal with its banks to extend the due date on its debt. Today's rights issue is over £200 million more than the company was predicted to raise

The company, which sells 1,000 houses a month and has £1.3 billion in debt, has said previously that it would not look to raise funds until markets had stabilised, but, with the housebuilding sector showing signs of improvement, it has decided to act.

Redrow is raising £150 million in a 13 for 14 rights issue also in order to amend its debt covenants with banks. It accompanied the raising with the £15 million acquisition of a smaller, privately owned developer, Harrow Estates.

Liberty International, the property developer, is seeking about £300 million from shareholders in a placing of 9.9 per cent of its capital. It raised £592 million in April in a rescue issue designed to escape bank covenants and finance itself up to December next year. It said the second fund raiser would allow it to finance work after this date which could be done largely as and when it chose, rather than when its banks insisted.

It aims to invest in its 14 regional shopping centres across the country which are being hit by the bankruptcy of many tenants as well as its two big developments in London, Covent Garden and Earls Court & Olympia.

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Maybe they should do a Comic Relief special for corporate victims of the credit crunch. Lenny Henry could be brought it to make moving films of spivs in distress.

And maybe Anneka Rice could fly around the country in a Barratt's helicopter trying to find a Barratt house that's good value for money.

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As I'm sure interestrateripoff will confirm, a wave of rights issues would be very bad news for our wealth as it would accelerate the deleveraging of the economy.

Investors give cash to companies --> companies reduce bank debt.

This is deflationary from a monetary perspective and will no doubt require the BoE to indulge in some more QE to compensate.

Isn't modern economics theory great?

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Last time I looked, earlier this morning, Barratts shares were up strongly, despite a loss of two thirds of a billion and the prospect of shareholders seeing a dilution of their holding unless they cough up for a rights issue!!

PS I just checked and Barratts have lost the early gains now - down a fraction on day.

Edited by blankster

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