Barratt has struck a deal with its banks to buy embattled chief executive Mark Clare more time to turn its fortunes around. The housebuilder is in talks with the Royal Bank of Scotland, UBS, HSBC and Lloyds. Sources close to the talks said an agreement had been reached to waive a clause that could have put Barratt in breach of its lending covenants after it writes down the value of its landbank in July. These "asset cover covenants" govern the ratio of debt to assets, and breaches were thought likely, given the falling land market and Barratt's debt of ￡1.8bn. A source close to the talks says all Barratt's other refinancing options have been ruled out. It is understood the waiver will remain until it has repaid the remaining ￡400m it borrowed to fund the ￡2.2bn acquisition of Wilson Bowden in February 2007. It has until the middle of 2011 to do this. The source said: "The picture has become a lot clearer in the past few days. Despite rumours about Barratt's future, the banks are very understanding of its position." An announcement is expected from Barratt at its next trading update on 10 July; it declined to comment this week.
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