Housebuilder Redrow (RDW) gained 6.7% to 432p as it lined up fresh funding to see it through a period of effective hibernation for the housing market.
The company has secured access to a £300m Covid Corporate Financing Facility and confirmed it had furloughed 80% of its workforce under the Government's job retention scheme.
CREDIT TALKS
Redrow announced it has been confirmed as an eligible issuer for the CCFF, with an issuer limit under the facility of £300m, which remains undrawn.
The company also said that negotiations for an additional £100m of headroom under its existing revolving facility (RCF) with its six relationship banks were 'progressing well', with documentation to be concluded by the end of April, which will result in the existing RCF increasing from £250m to £350m.
The company said that on the 27 March the board and senior directors in the business announced internally they had volunteered to take a 20% pay cut for the duration of the crisis and that, since then, the wider directorate in the business have also volunteered to take a salary cut of 20%.
Executive chairman John Tutte said: 'The positive progress we have made on securing additional banking facilities means we can now finalise plans for our valued workforce and supply chain, to make an orderly return to work when we are advised it is safe to do so.'
DIVIDEND SAFE?
Broker Peel Hunt reckons today’s news makes it unlikely the company will join the growing list of companies going cap in hand to the market for an injection of cash. Commenting: ‘The additional bank facilities remove any lingering fears that the group would look to raise fresh equity.’
UBS says: ‘We think cash generation will pick up significantly as and when the market re-opens: homebuilders tend to be highly cash generative in market downturns as working capital is released through WIP (work in progress) reduction and limited new land acquisitions.’
