Wimpey shares halve as cash call snubbed

The news was accompanied by the departure of the finance director, a warning the housing slump will last another 18 months at least and confirmation it is to start laying off 900 workers.

That all sent shares in Taylor Wimpey - listed until recently in the FTSE 100 - halving to 30p, and precipitated a major sell off across the housebuilding sector.

Broker Dresdner Kleinwort said it could no longer put a valuation on the company.

"We believe there is a very real danger that Britain's biggest housebuilder faces collapse," said analyst Alastair Stewart, who warned the same could be true for archrival Barratt.

Taylor Wimpey admitted on Monday it could breach its banking covenants - the legally binding terms on which it has borrowed £1.7 billion - by next February if it did not raise money from its investors.

But after two days of talks, not enough of its City shareholders - the likes of major institutions like Standard Life, Legal & General, Barclays, Scottish Widows and M&G and the hedge fund Toscafund - were prepared to back the plan or pledge enough money.

It is understood that at meetings last night the investors had been spooked by the worst housing market survey yet from the Nationwide Building Society, yesterday's 146-point fall in the FTSE 100 and the shock revelation at those briefings that finance director Peter Johnson is leaving. One of the key orchestrators behind last year's debt-fuelled merger between Taylor Woodrow and George Wimpey, he is leaving with no successor in place.

Chief executive Pete Redfern says the outlook is bleak, with no recovery in sight through to the end of next year. He admitted reservations have slumped by as much as 60% in recent weeks, and are down 45% year on year. Cancellations for the first half of the year have jumped 50%.

Sales prices are down 8% on a year ago, completions are off by a third and the order book is also a third lower than the previous year.

"The statement could not be more grim," said Dresdner Kleinwort's Stewart. "Talks with current and potential shareholders failed to raise an expected £500 million; banking covenants could be breached at the next testing point; potentially more writedowns on top of the £550 million taken in the UK; interim dividend cancelled; net debt of £1.7 billion; FD going; UK in significant downturn; a third of offices in the UK closed.

"We believe banks might be forced to rescue the company - but this cannot be taken for granted.

"We believe the operational and financial position with Barratt is worse."