Taylor Wimpey, the U.K.-based parent company of Taylor Morrison, has gained a brief reprieve from its lenders, who have agreed to wait until March 31 instead of Dec. 31 to test its financials for lending covenant violations.
The builder, which has been wrangling with a precipitous home construction slowdown in the U.K. as well as the U.S., would clearly have failed the year-end test, breaching its interest cover covenants this month and putting it into default. It will likely fail the test in March as well unless it figures out how to recapitalize the company's debt in the meantime.
"Discussions with our debt providers continue on a constructive basis," the company said in a late December press release about the testing date postponement. "We remain confident that a robust, stable medium-term financing solution for the group, which takes into account the requirements of all relevant stockholders, will be achieved prior to the end of this deferral period."
The company is scheduled to give an update on the negotiations with lenders when it issues a trading statement on Jan. 13.
