BUILDERS GO CAP IN HAND FOR 850M
HOUSEBUILDERS Barratt and Redrow are today expected to tap shareholders for a total of £850m to shore up balance sheets that have been battered by the property slump.
Barratt is set to unveil plans to raise £700m in a placing and open offer through its house broker UBS.
And rival Redrow is expected to launch a £150m rights issue in a move that will be supported by chairman Steve Morgan, who has a 29.9 per cent holding.
Today’s fundraisings follow in the footsteps of a slew of house building rivals that have gone cap in hand to the market.
Berkeley, Bovis, Bellway and Taylor Wimpey have all tapped shareholders for a total £1.2bn.
The cash calls come as no surprise to analysts who said that Barratt would have to raise at least £500m this month to make a dent in its £1.3bn debt mountain.
Investec analyst Alastair Stewart said that Barratt was “the riskiest of all the major quoted housebuilders”.
Stewart said that the group had “simply too much debt, even after the possible rights issue, which, we suspect, would mainly be to fund existing sites – not to purchase new land”.
Redrow’s Morgan, who returned to the group in March after staging an audacious boardroom coup, reported the firm’s worst set of trading results in the group’s history earlier this month. It suffered a record loss of £140.8m.
Panmure Gordon analyst Mark Hughes said that due to early signs of market stability he believed that the housebuilders would be offering a discount of around 20 to 25 per cent on their respective cash calls.
Bovis, a stronger rival, recently launched its £60m share placing with a discount of just 1.17 per cent, but struggling Taylor Wimpey launched its rights issue with a hefty 48 per cent discount.
Redrow and Barratt declined to comment.