Interest building in Taylor Wimpey buy-out

Buy-out firms are circling Britain’s biggest housebuilder Taylor Wimpey, it was reported today.

The ailing business, which last week axed 1,000 jobs amid a further slump in property sales, is saddled with debts of £1.9bn (€2.2bn).

A raft of American private equity firms are eyeing the business and attempting to strike a deal with chief executive Peter Redfern, the 'Observer' said.

US private equity firms Oaktree Capital and Apax are considering a deal while UK players 3i and Permira are also said to be interested.

Taylor Wimpey was created by the merger of Taylor Woodrow and George Wimpey in July last year but shares have plummeted 98% as the credit crunch hits mortgage availability and sends house prices tumbling.

The firm must also renegotiate its terms with lenders before early next year to avoid breaking banking covenants.

As part of a restructuring, existing shareholders could be wiped out with private equity firms taking on the debt, although the plans could depend on the attitude of Taylor Wimpey’s lenders, the report added.

The housebuilder racked up £1.54bn (€1.8bn) in losses for the first six months of the year due to falling land values and goodwill writedowns from the merger.

Last week it said property sales slumped by 27% since the beginning of July, with the recent raft of job losses bringing its total cull to nearly 1,900 in the UK this year.

The firm, which was unavailable for comment, said its order book stood at 6,607 homes, 40% less than at this time last year.

It also warned of a potential further hit to the value of its land and building stock on top of the hefty writedowns announced in August.

Taylor’s build rate has slowed to around 40% of normal levels as it adjusts to the dire conditions in the property market.

The number of home sales in the UK had fallen to at least a 30-year low, according to the latest survey from the Royal Institution of Chartered Surveyors.