No haircuts

2 April 2009 By Una Galani Follow @ugalani

The UK house builder s imminent deal with creditors may avert a shortterm covenant breach, but still leaves the group saddled with excessive debt. Unless the UK housing market makes a superspeedy recovery, TW will almost certainly need a second plan to get it on an even keel.

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Taylor Wimpey, the UK house builder, is understood to be close to finalising a deal with a group of its main creditors which could help complete longrunning talks to restructure its debt.

The house builder has been in talks to alter the terms on its £1.6bn debt since last summer. A final proposal is expected to be formally announced in early April and a final deal approved by the end of the month, following a 3 week bondholder approval process.

Taylor Wimpey has three groups of creditors. UK banks hold around £620m of drawn debt, US private placement bondholders have $700m, and Eurobond holders have £443m.

The company again deferred the testing date of its interest cover covenants from December 31 until the end of April.

Taylor Woodrow and George Wimpey merged in June 2007 in nil premium allshare deal that created the largest UK's largest house builder.

Taylor Wimpey shares rose 22% to 28p on Thursday, giving the house builder a £305m market capitalisation.

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