Thu 10 Jul 2008
Barratt shares buoyed up by bank bailout
In a surprise move for the markets, Barratt Homes’ shares have risen by 17% after the firm confirmed it is close to completing a refinancing package.Barratt finance director Mark Paine told the press that the deal, which will delay the firm’s repayment of £400m of debt, is imminent. The housebuilder is thought to have persuaded banks to relax its covenants after the release of its recent trading update. “We expect to sign in weeks, not months. We have a very detailed terms sheet, and we’re only down to the legal documentation now,” said Paine.
But this by no means assures the future of the rest of the industry, says Steve Turner, head of media relations at the Home Builders Federation. “Sadly, it may be another five years before building output matches the 190,000 home construction levels of 2007. There’s little the government can really do until the market realigns itself, which could take another two to three years, despite the ongoing threats to the economy.”
The Bank of England’s confirmed its decision to hold interest rates at 5% earlier today – a move expected, but criticised by the industry. “Today’s decision will be of little consequence to the nation’s home buying and selling public as lenders continue to step back from the market,” said Keith McNeilly, chief executive at Moveme.com. “What we need to see are some proactive steps by government to offer immediate relief to the industry – if it fails to do this, then the knock-on effect to the wider economy, which we are already beginning to witness, could be catastrophic.”
Barratt is still expected to make more than 1,000 staff members redundant to bring its workforce down from 6,700 to 5,500. Chief executive Mark Clare (pictured) confirmed that this figure is additional to the 2,000 laid off following last year’s merger with Wilson Bowden.
Posted by Marc Da-Silva
in Bank of England, Barratt Development, Home Builders Federation (HBF), Keith McNeilly, Mark Paine, News, Steve Turner, Wilson Bowden on Thu 10 Jul 2008
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