Wednesday Aug 20 2008
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The full statement from TW is available here. Keep hitting refresh for the latest below.

It’s 8:55BST and TW is down 47% - having come back a bit from earlier lows. Down nearly 56% shortly after open.

A quick glance around the sector:

BDEV: - 20.7%
PSN: - 19%
BVS: -9.2%

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9:00 Thank you for you patience… please stay on the line for the next available operator… probably should have dialled into this a little earlier…

Soothing world-not-ending don’t-panic music

9:05 We’re off. Peter Redfern, CEO says we’ll be looking at for main areas.

Financing
Trading
Business profile
View of land value

For the latest figures, says Redfern, take a look at slides on the TW website.

“On Monday we were going through a process of raising equity capital - based on view of market over the next eighteen months.”

“Under some scenarios there is a possibility of us breaching our interest cover covenants - at the earliest in 2009.”

On the back of changes in the market, capital raising isnt going to be going ahead anytime soon says Redfern.

Investors are all very happy says Redfern. They just dont want to give us any money.

9:10 After a brief sojourn in the US market, we’re now onto the UK….

“Market is pretty subdued, but in line with what we’ve expected. There’s no doubt that the market has declined since about week two of April.” Specific.

“Price are under pressure.”

Redfern estimates a 5-6% decline in house prices going forward. The market is not going to improve. “Our whole approach to the business is predicated on that assumption.” TW is looking at “pretty bearish scenarios” and the outlook is likely to deteriorate. “The rate of decline… could likely get worse.”

9:15 Onto the business itself.

‘We’re slimming down’ is the message. 900 jobs to be lost. £45m saved on an annualised basis. But it will cost £45m to affect the whole process.

9:16 WRITEDOWNS! On the landbank…

US: £70m

Spain: £40m

UK…. £550m - for now.

Redfern stresses that the UK writedown is based on current conditions, and will likely get worse. He refers us to the “slide pack”. Current writedowns are at about 10% of value. But in the worse case, could go to 30%… so triple that UK number. Or in paint.bitmap form… (about “a third” of the way along the x axis)

9:20 We’re on to questions…

Robert Gardiner at Davy… “Can you give us more colour on the writedowns?” Regions, products, houses, apartments, fixtures, fittings, et cetera…

A: Please see slide 11 (one of the most boring in the pack - definitely not “colour”)

The portfolio… about 62% houses, 38% apartments, weighted towards apartments, says Redfern.

Gardiner also wants to know about the covenant breaches, and the “optimism” of barely a week ago on efforts to raise money through equity.

“Obviously that’s a key question!”Says Redfern, clearly thinking of a key answer.

“We were very encouraged by the support from existing shareholders. We had a very… busy two days.”

“There are other avenues we’ve had soft approaches from” (down?) … “we’re not facing a brick wall”.

In terms of the banks… “we had a very sensible conversation based on what we thought was the optimal solution”… Sunshine, lollipops and, rainbows, everywhere.

9:30 An analyst from ABN whose name I missed (will find later) asks about the situation with TWs existing bond issues and pension funds…

No problems with bonds, says TW. As for pension scheme… the impact is small “in the scale of things.”

Did something change in the last few days which changed the fundraising situ - scared investors - ABN asks?

It was “a bridge too far” is the cryptic and none too informative answer from TW. Redfern repeats that existing investors were happy - but market volatility, and a range of bearish info about housebuilders scared off potential new investors without a prior, developed, knowledge of the business.

9:40 Mark Hake at Merrill Lynch asks about detail on UK writedowns and, as per slide 11, how does a 105% writedown, “mathematically speaking”, work?

This refers to mothballed sites… of which there are 9 or 10. “We looked at it site-by-site” very conservatively. Most of them are commercial sites. None the wiser, to be honest. Here’s the slide:

Hake presses on the fundraising… if not soon, then when? There’s a “ticking clock.”

“Presumably something needs to be struck in the next few months” says Hake.

Redfern: “That’s absolutely right. It’s months not weeks. But its not necessarily that ground needs to be given on either side. There are people that we;ve talked at so far who may want to go ahead with more time. But it’s actually about opening it up to more parties rather than giving concessions to those involved already.”

9:48: Kevin Cammack at Kaupthing asks for more info about the situation with the banks, and whether the equity raising was a condition?

“The contractual agreement with the banks is based on us raising equity” says Redfern. “That is not to say that an agreement could not have been raised that was not conditional on equity.”

In other words, it was TW’s idea to make it conditional on equity… which turned out to be… a bad idea.

9:55 Alistair Stewart at DK asks… “You said you weren’t buying land, but are you considering selling it? Or do you think you will come under any pressure to sell if equity raising becomes more difficult?”

Redfern “Land sales… er.. um… will we sell land?”

Yes man! That’s what Stewart asked…

“Yes.”

“…maybe at cost level. It’s difficult to see how it will pan out. There’s no pricing level at the moment. If we wanted to go out there today, I don’t think it would be possible. There’s only really people out there at the moment who want to buy at distressed prices.”

(Bad news Kirstie, bad news Phil.)

AS: “And what if equity cant be raised? Will you sell land no matter what?” (Sic. even if at distressed prices)

PR: “I don’t think we can really answer that question Alistair. It depends on many things. It’s not one I could speculate on.”

AS: “I’ve been hearing rumours that very big housebuilders have been failing to sell a single house in recent weeks.”

PR: “We haven’t had a single week at those levels. We haven’t had a single week when we haven’t been ahead of the industy. Overall we’re not into that sort of territory. Our net sales in the last two weeks have been better than in the preceding three or four. ”

10:09 Mark Stockdale, UBS

Writedowns… would you have preferred a £750 or a £1bn writedown if you could? (Rather than the £550 announced) Take the hit now rather than later? Were you constrained by accounting?

“Yes, in an ideal world we would have gone further were it not for accounting.”

10:13 A question now about the recent placement in the US of £380m in debt. Are the covenants on that similar to the covenants on the existing debt?

“Yes. The covenants are more or less identical”

Breaches all round then.

And with that, fin. The live-blogging, that is.

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Oh no - actually, maybe TW is fin too. A note from Dresdner just sent to clients:

We believe there is a very real danger that Britain’s biggest housebuilder by volume faces collapse when covenants are tested in February.

Tune in to Markets Live at 11 for all the latest.

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