Taylor Wimpey seeks extra funds

By Marc Roca

LONDON (Reuters) - Builder Taylor Wimpey (TW.L) said it was seeking extra funds as it warned of a "significant downturn" in the housing market and an expected 660 million pound writedown in the value of its assets.

Britain's biggest housebuilder by number of homes built said on Monday it expected to raise the money from shareholders and other institutions, most likely from a placing and open offer of its shares, but declined to comment on press reports that it was looking to raise 500 million pounds.

Analysts have been warning that housebuilders, struggling after the global credit crunch ended a decade-long UK housing boom, are set for a round of refinancings as the market continues to deteriorate. Options including discounted shares issues, direct funding from institutional investors or even debt-for-equity swaps.

"This may be the first in a line of fund raising for the sector," Landsbanki analyst Simon Brown said in a research note

Taylor Wimpey, the most-indebted UK housebuilder alongside Barratt (BDEV.L), has been forced to seek emergency funds as the weight of 1.9 billion pounds in net debt combined with sharp drops in sales put its balance sheet under pressure and threatened a breach of banking covenants with lenders.

"Taylor Wimpey is looking to raise 500 million pounds according to well informed comment and this is aimed at supporting a stretched balance sheet and cash flow position," Brown said.

Shares in Taylor Wimpey and other housebuilders, which have plunged amid concerns a downturn might damage their ability to finance their debts, climbed in early Monday trading on initial hopes the sector was getting to grips with its problems, but reversed direction later on.

At 11:34 a.m. Taylor Wimpey shares, which have fallen almost three-quarters in value over the last three months, were down 4.8 percent percent at 59 pence. Barratt (BDEV.L) was down 5.9 percent, while Persimmon (PSN.L) was down 0.2 percent.