McCarthy & Stone ‘not looking for cash deal’

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Sources close to retirement housebuilder McCarthy & Stone have dismissed reports it will need new shareholder cash as part of an £800m refinancing deal.

The news follows media reports at the weekend that it was likely HBOS and Reuben Brothers would pump new money into the company to secure a relaxation of its lending agreements.

A source close to the talks between the £458m-turnover group and its lenders expressed surprise at the reports. He said: "It’s news to me because the company hasn’t been working on that basis, as far as I’m aware. If it was true, it would obviously make refinancing a lot easier.”

Phillips: Declined to comment on the talks with McCarthy & Stone’s lenders

A source close to the company said the deal did not need a cash injection. He said: “The company is not looking for cash and I’m pretty certain there’ll be no new cash going in. The deal being discussed is purely about managing interest payments on its £800m of debt.”

He said a deal would probably be announced in a month to six weeks’ time, adding: “There is no reason to believe there will be any issues. The company is comfortable that a solution can be reached.”

McCarthy & Stone appointed bank Rothschild in June to help restructure its debt and prevent it from breaching banking agreements amid the downturn.

In July, Barratt struck a deal with its bank to relax its covenants, which was not based on new cash. Taylor Wimpey looks likely to do the same.

We need to take painful measures now to ensure the company remains in good shape
Howard Phillips

Meanwhile, McCarthy & Stone has cut 200 more jobs. The news follows an announcement by the company in May that it would cut 120 jobs, and means it has lost over a quarter of its 1,200 workers since January.

The jobs will be cut across all departments, at its offices in Byfleet, Coventry, Potters Bar, York, Glasgow and Bournemouth.

Howard Phillips, chief executive of the company, said: “There is no escaping the Bank of England’s predictions for the coming year. We need to take these painful measures now to ensure the company remains in good shape to resume expansion as soon as the economy allows.”

The company declined to comment on the talks with its banks.