Persimmon plans future with funding deal

CREDIT crunch struck housebuilder Persimmon has successfully agreed new credit facilities proving that its cash saving efforts have paid off.

The York-based firm said today that it had agreed terms for a new forward start banking facility of £322m, which matures on March 31, 2012.

The builder said that full documentation was currently in the process of being finalised and that a further announcement would be made once it had been signed.

Taken together it now has committed funding of around £1bn reducing to £560m by 2011.

“The covenants associated with these new facilities are appropriate for the current market conditions and our strategy of focusing on cash generation,” it said.

“These include cash flow based interest cover, minimum net worth and total gearing based measures. We expect these new facilities to provide ample headroom and support for the effective management of the business over the next few years.”

In January, Persimmon said that its cost-reduction strategy had enabled it to successfully reduce its total borrowing.

At the end of 2008 borrowing were £600m compared to £906m in June.

It attributed close control of work in progress, a focus on sales of stock properties and a more than 50% reduction in part exchange holdings to strong cash generation despite the previously reported deterioration in trading conditions encountered from early September when it was forced to write off £600m off the value of its land.

Sales on more than 10,000 units at an average selling price of £172,000 had been completed representing a turnover of £1.76bn.