Construction

Taylor Wimpey needs a deeper debt revamp

2 Apr 2009

The UK house builder s imminent deal with creditors may avert a shortterm covenant breach, but still leaves the group saddled with excessive debt. Unless the UK housing market makes a superspeedy recovery, TW will almost certainly need a second plan to get it on an even keel.

Masonite bankruptcy is taste of senior lender pain

3 Mar 2009

The KKRowned door maker says senior secured creditors will get new loans worth just 20% of their original principal, plus equity. That reflects the stretched capital structures created during the credit boom. Expect senior lenders to recoup less than anticipated elsewhere, too.

Lafarge, Saint-Gobain put market to E3bn test

20 Feb 2009

The French companies managed to stay profitable in 2008, despite severe slumps in both cement and building materials. But the two are bracing for even tougher times. They're cutting costs and reducing debts and asking holders to stump up for deeplydiscounted rights issues.

Rights issues: a new fee pool for commercial banks

19 Feb 2009

Conventional sources of underwriting investment banks and hedge funds are drying up. But in the UK, commercial banks are picking up the slack. It s a way of squeezing more out of existing lending relationships. The trend has further to run.

Dubai’s Nakheel drops 1km back to earth

14 Jan 2009

The stateowned property developer is wisely suspending a vainglorious project to build a 1km tower, which was trumpeted when Dubai s financial health was already looking a worry. With Nakheel still trying to refinance $3.5bn, this might not be its last retreat.

Merckle shows liquidity is a slippery concept

7 Jan 2009

The suicide of German billionaire Adolf Merckle, blamed on financial woes, raises a question: how could a man with E7bn of assets run aground over a mere E400m loan? A double bet on company shares may be one reason along with the difficulty of turning assets into cash.

Itinere deal keeps Sacyr from the emergency room

1 Dec 2008

Sacyr's E7.9bn sale of its tollroad unit helps cut its E19bn debt mountain, and allows the Spanish construction group to meet debt payments for the next year or so. But it may not be enough in the medium term. The buyer, Citi Infrastructures, has got a good, if complex, deal.

LBO firms face tough choice: double down or get out

18 Nov 2008

KKR s Masonite is the latest LBO in trouble. Many others are staring at bankruptcy. Buyout firms must decide whether to inject more cash into companies or let them go belly up. With few opportunities elsewhere, anteing up may be wise, even if it doesn t mint big fees.

Carlyle’s exit snag underlines credit crunch lesson

17 Nov 2008

The buyout firm is suing Russia s Novolipetsk Steel for walking away from a deal to buy John Maneely. Buyout firms know the broken deals game well, often from the other side. Like recipients of LBO offers, private equity firms should stresstest their buyers.

Barratt moves away from worst-case scenario

10 Sep 2008

The UK housebuilder still faces all sorts of problems house prices will keep falling, and a revival in mortgage markets and consumer confidence looks far off. But with renegotiated covenants and strong cash generation, it should at least be able to limp on in its current form.

Colonial probably won’t go the way of Martinsa Fadesa

3 Sep 2008

After Fadesa went bust with E5.4bn of debt in July, many expected the Spanish property sector to collapse like skittles. Colonial, with E8.9bn of debt, is certainly at the mercy of its banks. But it's in all parties' interests to restructure the debt not tip it into bankruptcy.

British Land suffers from economy – and gloom

14 Aug 2008

The UK real estate firms exposure to the City of London where rents are now falling may justify it trading at a hefty discount to its assets. But the company's shares are also suffering from the bearish assumption that falling rents will be more than fully reflected in prices.

Taylor Wimpey moves to Plan B

24 Jul 2008

The UK house builder has called in NM Rothschild to renegotiate its covenants, confirming that the sector can t raise equity in the current environment. Taylor Wimpey will now try to ensure its bondholders don t abandon the company. Luckily, that doesn t look likely.

ACS plan to sell Union Fenosa stake looks odd

17 Jul 2008

The Spanish construction company says it may sell its E5bn controlling stake in the energy firm to focus on Iberdrola, where it also has a stake. ACS appears to be abandoning its plan to merge Iberdrola with Union Fenosa. That may have more to do with ACS's debt than strategy.

Spanish builders botched their diversification

4 Jul 2008

The industry leaders prepared for the end of the domestic construction boom in good time. They diversified abroad and in energy companies. But they did it by borrowing, leaving them vulnerable to the credit crunch. Most companies are now too complex to understand.

Taylor Wimpey capital fiasco creates quadruple crisis

2 Jul 2008

The UK housebuilder's failure to raise £500m doesn't just plunge it into turmoil. It deepens the crisis for the sector and for UK banks exposed to it. Finally, it exposes the flaws in the cunning new capital raising scheme pioneered with such fanfare by Barclays only last week.

Taylor Wimpey kicks off UK housebuilder capital-raising spree

30 Jun 2008

The UK company is unlikely to be the last in the sector to pass the cap if house prices keep falling, most will have to write down asset values. But the deal's likely structure suggests the builders may have learned from UK banks chequered attempts to raise capital.

UK housebuilders face bank straitjacket

18 Jun 2008

Shares in Taylor Wimpey, Barratt and their peers have dived again. If UK house prices fall 20%, some big names could break their covenants. Banks would then have to nurse them back to health. But the medicine tight controls on their spending and higher rates could be painful.

Barratt may need lenders’ mercy

10 Jun 2008

The UK housebuilder has a £1.7bn debt pile and a market capitalisation of just £300m. Its land bank can be run down for cash. But a rights issue would be tough after a 90% shareprice fall in a year. Further writedowns which look likely could mean the banks decide its fate.

UK building societies face tough times ahead

22 May 2008

Nationwide's annual results suggest the UK s largest building society is weathering the credit crunch. But its smaller peers may be in for a rougher ride. Mutual societies face the same rising costs and writedowns as everyone else without the same capacity to raise funds.