Sunday, February 17, 2008
Britain’s biggest housebuilder, is at risk of breaching its banking covenants.
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.