UK house building firm Taylor Wimpey (link will open in a new window) is continuing talks with debt providers about amending its existing borrowing arrangements but now believes an arrangement will not be place until early next year.

In its interim statement issued at the end of August, Taylor Wimpey stated that although the group was in full compliance with all of its debt covenants and liquidity was strong, it did expect to breach its existing interest cover covenants when tested for the full year. As such it was talking with its banks about changing its covenants and hoped to have this concluded before the New Year. Today it said these talks are ongoing and that the coordinating banks have indicated their intention to replace its current covenants with amended ones that greater reflect the difficult market environment.

According to the firm the recent events in world financial markets have reinforced its board’s cautious view of the short term outlook for UK housing and said securing a comprehensive financing structure that is robust under all reasonable downside scenarios is essential.

As such the Board has extended its discussions to also include Eurobond holders, which it anticipates will prolong the negotiations it is having with banks and it is now more likely any agreement on its revised covenant structure will not be concluded until early next year.

At the end of the summer, Taylor Wimpey stated its business priorities were cash management, cost reduction and to protect shareholder value. In early September the group sold its UK business of Taylor Woodrow Construction to Vinci plc, for £74 million in cash with the intention the net proceeds would be used for general group purposes.

This article originally appeared on Hemscott.com. Morningstar and Hemscott are now one company. You can see the original version of this article on the Hemscott web site.