Oakdene in breach of banking covenants

Housebuilder Oakdene has failed to raise £5m through a share placement and dropped more than £6m into the red for the first six months of 2008.

It is also in breach of its banking covenants and relying on a temporary facility from its lenders.

The group said it had placed 8,987,108 of the 10m shares it had planned to and was seeking legal advice about what to do next.

It is thought one or more investors got cold feet given the fact shares were being offered at 50p despite the fact Oakdene’s share price fell to 17p today.

By way of a sweetener it offered warrants with each share – or options to buy at 50p at a future date.

One City analyst said: “It clearly wasn’t enough. The share price has been heading south for a few weeks now and someone has obviously got pulled out.”

Its loss of £6.4m in the first half of 2008 followed land writedowns of £7m.

Turnover was down 41% from £18.9m to £11m.

The company said: “In common with most housebuilders Oakdene has suffered from the effects of the turmoil in the global markets which has led to a shortage of mortgage availability.”

In relation to the likelihood of agreeing a covenant deal with its banks, it said: “Discussions around future banking terms are ongoing with our bankers. We are extremely grateful for their support to date and we are seeking to reach agreement on future support shortly.”