Taylor Wimpey begins rights issue talks

Taylor Wimpey has begun talks with its largest investors about the possibility of a rights issue, Building understands.

Although discussions are at an early stage, City sources have confirmed the housebuilder’s advisors have made informal approaches to investors about raising an estimated £350m.

The figure is the payment the company needs to make before next summer to avoid a higher interest bill on its £1.55bn debt pile.

One source said: “Taylor Wimpey began sounding out investors after its bank signed off the refinancing deal earlier this month. There is a feeling they don’t want to hang about and get it done as soon as possible.”

Taylor Wimpey declined to comment on the speculation.

Taylor Wimpey’s largest shareholders are:

Barclays – 6%
Polaris – 5.5%
JP Morgan Asset Management – 5%
Standard Life – 4%
Legal & General – 4%
Prudential – 3.5%

The exact amount raised by any rights issue and level of discount will be determined by the preliminary talks.

It is understood one issue making investors cautious is the pledge they have made to support the refinancing of the banking sector as a priority.

But most analysts believe there is an appetite among investors for a rights issue at Taylor Wimpey.

Robin Hardy at KBC Peel Hunt said: “If everyone plays ball it doesn’t need to be dilutive and you have the double win of paying down debt and boosting the equity base.”

Meanwhile the company has announced the sale of its construction business in Ghana to the existing management for £1.

It completes its exit from the construction arena to focus on housebuilding.

Its Ghana business made a loss of £14.8m in 2007 and the disposal will have no impact on Taylor Wimpey’s results for 2009.