Taylor Wimpey, parent company of Taylor Morrison in the United States, has struck an agreement to refinance its debts, clearing the way for a possible sale of its North American assets.
During a recent conference call with analysts, Taylor Wimpey CEO Peter Redfern acknowledged that its new financing agreement wouldn't require approval before an asset sale, "clearing out the way" for a potential sale. "We haven't changed our view on timing, but it is still a bit early to give you anything specific," said Redfern in the call.
Rumors that Taylor Wimpey plans to sell its North American operations, including its Monarch brand in Canada and Taylor Morrison in the United States, have been rampant for a year. And management has not discounted them.
During the call, management offered some information about how well its North American market has been doing since June. Redfern said management's prediction that 2010 would be a volatile year have come true with a post-tax credit sales dive that has since improved in recent weeks.
"We've seen a better couple of months [recently]," Redfern said. "I'm a bit more optimistic. It's still shades of gray there. There is still a long way to go."
He didn't offer specific sales numbers, only order rates for the second half of the year. The combined North American operation has been selling at a rate of 0.47 homes per week, close to the 0.50 it sold in the first half of the year. But Canada continued to be the better performer compared with the United States. Sales rates there were 1.43 a week. Taylor Wimpey management didn't offer specific sales rates for the United States alone, only saying they were weaker than the first part of the year.
Average sales prices, however, have remained flat over the second half of the year to date, Redfern said. Backlog value in the combined North American markets was $1.1 billion in the 44th week compared with $1.05 billion last year.
Redfern also announced that the company had an agreement for a revised £950 million credit facility that is conditional on the company raising another £350 million from either public or private capital markets. Taylor Wimpey is expected to complete the refinancing by the first quarter of 2011. This new money has fewer operational restrictions. For instance, there is no restriction on new land investment, according to Taylor Wimpey management.
Teresa Burney is a senior editor for BUILDER and BIG BUILDER magazines.