Home builder Barratt raises funds for expansion
September 23, 2009
One of the U.K.’s biggest home builders has just announced a share issue to raise £720.5 million. Barratt Developments PLC have said that they are seeing a stabilisation in the housing markets after the global financial crisis so severely affected house prices and the ability for companies to embark on new construction. A previous announcement by the housing firm that they would not be seeking to raise any funds has been reversed because the company now sees positive changes in the market.
Mark Clare, CEO of Barratt Developments said that the move was to take advantage of the new stability and to reduce its debts whilst tightening up its balance sheet. The raised funds would be used to develop existing sites and also allow the company to invest in new areas of land for construction as and when the opportunities arose.
The new fundraising objectives have been announced after Barratt has had to report a loss for the first half of the year of £486.6 million. A year ago the company was able to declare a profit of £86.4 million.
Barratt’s move is part of an extension it has put on the due dates of its debts with its lenders. It is also hoped that the plan will reduce its debt from £1.28 billion to around £700 million. Clare said that already this year Barratt had missed the opportunity of purchasing some sites because it hadn’t had the funds.
The company has also said that since the end of its financial year it has seen a fifty-three percent rise in reservations for new houses and that the prices of these reservations were higher than had been expected.
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