Housebuilders join cash-call trend

23rd Sep 2009 08:08

Housebuilders Barratt Developments and Redrow will raise around £870m between them to strengthen their respective balance sheets and take advantage of acquisition opportunities. Barratt confirmed plans to raise £720.5m through an underwritten placing and a deep discount rights issue, while Redrow announced a £150m rights issue.The two housbuilders follow Taylor Wimpey, Bovis, Berkeley Group and Bellway, all of which have tapped shareholders for funds in the last few months. Persimmon is the only major housebuilder not to have had a cash-call. Barratt will place 72.9m shares at 240p, representing a 10.6% discount to the closing price of 268.5p yesterday. In addition, there will be a 1.3 for 1 rights issue. In total, 618.4m new shares will be issued. The rights issue will raise £545m and the placing £175m.The fund raising follows a grim set of results with a loss before tax and exceptional items of £144.1m (2008: £392.3m profit) and a loss before tax of £678.9m (2008: £137.3m profit) in the year to June. Net debt at the year-end was £1.28bn.The firm said the new cash will enable Barratt to amend its bank covenants, allow it to develop its existing sites and put it in a better position to take advantage of land purchasing opportunities as and when they arise.Redrow will use £15m of its proceeds to acquire Harrow Estates Business and options to acquire further land assets from Harrow Estates.The 13 for 14 rights issue will see 148.5m shares priced at 105p each, a 55% discount to the middle market price yesterday.Redrow said the rights issue will also strengthen its balance sheet and reduce net gearing, provide the company with greater financial flexibility and improve ability to acquire and develop sites.Meanwhile, property firm Liberty said today it is placing up to 56.1m new ordinary shares to raise £316.4m, which will fund fresh investment plans.A wave of rights issue from companies in other sectors is expected in the coming weeks. Yellow Pages group Yell also said it is considering a £500m cash call as part of a comprehensive refinancing package being thrashed out with its banks.