Barratt Developments cuts 1,200 jobs

By Dan Lalor

LONDON (Reuters) - Barratt Developments (BDEV.L) will cut nearly a fifth of its workforce to cope with the housing market downturn, joining other builders taking similar measures, and will not pay a final dividend for 2007-08.

Barratt also said with its house sales running at half the level of a year ago it expected prices to fall 10 percent from their peak. As a result, it will write down the value of its land holdings by about 85 million pounds.

The comment came as the Bank of England's interest rate-setting committee votes at its monthly meeting and after nearly 4,000 job cuts by house builders in the past two weeks.

Barratt, which is cutting 1,200 jobs, said on Thursday it had agreed more relaxed covenants with its bankers for a new 400 million pound loan "as an appropriate, prudent response to current market conditions".

"Specifically, under this agreement, the interest cover covenant is replaced with a cashflow covenant and the gearing and minimum tangible net worth covenants are relaxed."

Barratt shares, which peaked at 1,310 pence in February 2007, rose as much as 30 percent to a two-week high in early trading before losing most of the gains to 54.5 pence by 9:29 a.m., valuing the company at around 134 million pounds.

Cazenove analysts said news of the new financing "will steady some nerves. However, the forward order book has declined 50 percent year-on-year and the group remains extremely operationally and financially geared".

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