The company, which is aiming to clear the debt within five years, is also raise selling prices. As a result of the increased expenditure on production, Fairview is placing less emphasis on increasing its landbank than listed competitors.
Most housebuilders reported lower sales for last year, but Fairview is trying to buck that trend. It says it aims to sell more than 1800 homes this year – up from the 1600 sold in 1999 – but a source said Fairview wanted to double production to about 3000.
As part of this strategy, Fairview is using contractor Costain to build 220 apartments at Apsley, a marina development in Hemel Hempstead. Fairview will build the houses in the surrounding development.
The source said: "Fairview thinks Costain will be able to build them faster and more efficiently than they could because of their expertise in main contracting. They have identified what they are good at and then contracted out what they aren't good at." Fairview finance director Richard Westcott, who is stepping down later this year, said the company would "break the back" of the loan in the first two years. The whole loan is expected to be paid off by 2005.
He said: "As a housebuilder, you want to be building as fast as you can and keep selling. We're trying to go as fast as we can but we have to keep our quality." Westcott said recent bad weather had slowed Fairview's plans.
The group went private in January when chairman Dennis Cope led the £307m buyout, which was backed by venture capitalist 3i. At the time, analysts said Cope had secured an excellent deal.
Group turnover for the six months to 30 June 2000 was £118.1m and pre-tax profit was £31m.
Firms who delist from the stock exchange strive to pay off loans because the venture capital companies which back them tend to want their money back within five years.
If the loan has not been repaid, it can leave firms with little choice but to rejoin the stock exchange to raise capital.
