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Taylor Wimpey given more breathing space by lenders

Taylor Wimpey, one of the U.K.'s best-known and largest housebuilders, has this evening been given until 31 March to sort out its finances and get the company back in order. Recent discussions with the company's financing partners have concluded with an agreement to review the company's balance sheet and debt structure no earlier than 31 March 2009. Like so many in the industry Taylor Wimpey has seen a dramatic fall in house sales and a substantial fall in house prices. Employee numbers have fallen sharply, cash flow has been impacted amid the general consensus of a difficult 2009 for the sector.

Over the last 10 years we have seen some substantial mergers and acquisitions in the housebuilding sector creating some of the super groups we see today. However, many of these mergers saw substantial increases in debt as the combined companies looked to gear up their exposure to what was a very buoyant UK housing market. The sudden decline on the back of the US credit crunch has caught everyone by surprise, not only by the severity but the speed at which it has all happened.

It hasn't helped that the banks are under more pressure themselves and are less flexible than in more recent times.

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