黑洞社区

Mark Clare, chief executive of Barratt, says the housebuilder will continue to operate within lending agreements despite an 鈥渋ntensely difficult鈥� market.

Speaking after a trading update on Tuesday, Clare said Barratt would have more breathing room with debt next year and that its banks had shown flexibility.

Mark Clare

He said: 鈥淲e expect to stay within existing covenants. After the reduction of borrowing and work in progress we announced, debt headroom in 2009 will grow quite significantly.鈥�

At 30 June 2008, the company鈥檚 debt was 拢1.65bn. When asked how flexible Barratt鈥檚 banking arrangements were, Clare said: 鈥淭he banks have provided good levels of flexibility. You have to consider at what point covenants need to change again, but that鈥檚 a long way off.鈥�

Last month 黑洞社区 revealed that the company鈥檚 lenders would adjust lending terms if they were in danger of being breached.

The trading update, which covered the period from 1 July to 9 November, said average selling prices will have fallen by between 15% and 20% by the end of this year and discounts being offered to home buyers would affect operating margins.

It warned that more writedowns would be announced next February as a result of the falls. Mark Pain, Barratt鈥檚 finance director, said it was too early to tell how big the writedowns would be.

As a result of discounts and incentives, reservation levels were down just 6.6% since September.