APRIL 2 2009 14:14h
Shares in Taylor Wimpey, one of the UK`s largest housebuilders, rose as much as 25 percent on Thursday.
Shares in Taylor Wimpey, one of the UK's largest housebuilders, rose as much as 25 percent on Thursday, after a Financial Times report said a deal had been struck with bondholders, one of the company's main groups of creditors.
But an agreement with bondholders has not been signed yet, one of the sources told Reuters.
"There is a formal process to get approval for restructuring a public bond issue and that has not yet begun, but it now looks like only a matter of time," the source said.
Agreement has been reached with the steering committee representing a group of bondholders, added the source.
Such an agreement would bring close to completion long-running talks to restructure Taylor Wimpey's 1.55 billion pound ($2.22 billion) debt, and secure its future.
A standstill agreement, preventing creditors from demanding their money back, had been extended from a March 31 deadline, the source said, who was optimistic about a deal.
"The talks have been going on for longer than anyone had hoped for but it is no-one's interest for the company to fall over," the source said.
Bondholders are owed a total of 450 million pounds, with maturities in 2012 and 2019. The remaining debt is held by banks. Much of the borrowing stems from Taylor Wimpey's acquisition of George Wimpey in 2007.
That deal was supported by a 1.65 billion pound loan led by Barclays, HSBC, Lloyds and Royal Bank of Scotland.
The Financial Times report said the creditor agreement included a clause that would see the company's debt costs rising in 2010 unless it raised an additional 300 million pounds in capital, roughly equivalent to its current market value.
The company must release its trading results by the end of April, four months after its financial year end.
Taylor Wimpey shares have lost over 85 percent of their value over the past 12 months on concerns it would breach banking agreements and creditors would step in.