Barratt signs new £400m borrowing facility

We spoke a few days ago about a number of housebuilders who are having a difficult time during this current property crisis, now Barratt is another one who is under extreme pressure.

Mark Clare from Barratt Developments has been doing all he can just to insure that the company can survive this current downturn, he has managed to keep things going, but only just.

Barratt Developments has managed to sign a new three-year £400m borrowing facility, they have also managed to persuade banks to adjust and relax its covenants. This new deal means that the package is linked to the company’s cash flow rather than the normal interest cover.

The result is that Barrett are able to limp along for some time and generate cash from house sales, which do not give them as much profit as they once used too.

Barrett’s interest payments on their debt will rise to about £150 million in 2008-09, that is from £130 million, so they will work hard to try and reduce this debt, but in the current climate that is going to be very hard.

Barrett has to put up with more people visiting their new homes knowing that most will never go back; it is just much harder for them to make a sale these days. There forward sales are now half what they used to be from the same period last year, and things look set to get even worse.

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