Crest Nicholson strikes rescue deal with lenders

Crest Nicholson has struck a rescue deal with its lenders that sees them take a 90% stake in the housebuilder.

The remaining 10% will be held by a group of seven executive directors as part of a deal that saw debt written down by £630m from £1.13bn to £500m.

The new debt will expire in 2012 and the company will be given a new £40m working capital facility.

Crest Nicholson had been struggling to repay its debt as a result of the housing downturn and struck a deal with its lenders in October to suspend interest payments ahead of a potential breach of covenants.

Chief executive Stephen Stone said the deal demonstrated the supportive stance of banks towards volume housebuilders. “It shows the only way lenders have to preserve value is to ride out the cycle. The fundamentals of the UK housing market are good and the supply/demand imbalance will only be exacerbated going forwards.”

Prior to the deal, HBOS had an estimated 45% stake in the business. The company did not reveal the stake held by Lloyds Banking Group (formed via the acquisition of HBOS by Lloyds TSB) under the new deal but it is understood to be in the region of 25% to 30%.

It is also understood Sir Tom Hunter, who invested £50m via his West Coast Capital vehicle in joint venture with HBOS to take the company private in May 2007, has lost about £45m of his stake and no longer holds any equity or debt in the business.

A company statement said Hunter and HBOS had acknowledged their stakes had no value for the purposes of the debt-for-equity swap.

The deal saw the formation of a new company called Crest Nicholson Holdings buy the Castle Bidco vehicle set up by West Coast and HBOS

It is expected to be rubber stamped at a final court hearing set for 19-23 February.