Sunday, February 17, 2008

Britain’s biggest housebuilder, is at risk of breaching its banking covenants.

Barratt's borrowing causes concern

Barratt Developments, Britain's biggest housebuilder, is at risk of breaching its banking covenants. With debt approaching £2bn the builder, responsible for one in eight new homes built in the UK, needs to reduce its debt by £100m. As things stand it would break its contractual obligations with the banks.But there is nothing to suggest Barratt's banks would unduly penalise the company if it fails to reduce its debt levels, and the company is confident that it will meet its targets. Barratt borrowed heavily after it bought rival builder Wilson Bowden for £2.2bn last year, before the credit crunch precipitated a fall in house prices.The firm's shares have fallen alarmingly and some City insiders believe the company will have to go cap-in-hand to the City and raise money via a rights issue.

Posted by jack c @ 01:10 PM (729 views)
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3 thoughts on “Britain’s biggest housebuilder, is at risk of breaching its banking covenants.

  • How about a merger with Northern Rock?

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  • In the olden days , this company would be declared bankrupt. What a mess.

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  • “Barratt borrowed heavily after it bought rival builder Wilson Bowden for £2.2bn last year, before the credit crunch precipitated a fall in house prices.” I doubt there are many companies which are closely linked to the housing sectors which are in particularly good shape at the moment. The world has changed massively in 6 months – think of NR as the poster child for those caught napping by the credit crunch. They were all too busy gorging at the trough of cheap credit to notice the reality of their situation. If the biggest banks in the world are writing off billions because they were caught out you can bet everyone else is well and truly ****ed.

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