Taylor Wimpey Plc, the United Kingdom's largest home builder, reported a first-half loss of 1.42 billion pounds (US$2.62 billion) yesterday after writing down the value of its land.
The company also said it remains in talks with banks to avoid breaching loan terms.
Writedowns and goodwill adjustments totaled 1.51 billion pounds, London-based Taylor Wimpey said in a statement. The company posted a year-earlier profit of 20.2 million pounds.
Taylor Wimpey is closing a third of its UK offices, shedding 900 jobs and scrapping its first-half dividend as it reels from the country's most widespread housing slump in 30 years.
If it doesn't reach an accord with lenders, the company may breach its existing banking terms as early as February, Chief Executive Officer Peter Redfern said yesterday.
"The fact that we're getting closer and closer to them breaching covenants is making us nervous," Panmure Gordon & Co analyst Rachael Waring told Bloomberg News. "Until that is cleared up, there is no catalyst for Taylor Wimpey. There's nothing but negative sentiment towards it."
Taylor Wimpey shares fell as much as 15 percent to 44 pence in London trading yesterday. The company rose by a similar amount the day before after Building magazine reported that banks had agreed to a rescue plan that didn't require the company to raise additional cash.
"Had the financing rumors been confirmed, the stock would've been up," Waring said. "While the numbers are looking absolutely dreadful, they've become a little bit irrelevant. People are more concerned about what is going to happen" with the covenants, she said.
Panmure is advising its clients to sell the stock.
