BRITAIN’S largest private housebuilder crashed to a £78m loss last year as a debt-for-equity swap and a group restructuring piled costs onto its struggling balance sheet.
The Gladedale Group, whose projects include the luxury Quartermile housing development in Edinburgh, fell heavily into the red after a huge overhaul in the autumn that wiped out its founder’s shareholding. The news comes as fears grow of a second nosedive for the cornerstone construction industry. Economists are bracing themselves for a slump in second quarter new orders on Friday.
Epsom-based Gladedale lost £78.4m between 10 August and 31 December 2009, accounts filed at Companies House reveal. The company generated revenues of £360m but was pushed into negative territory by interest payments on its debt and charges relating to a reorganisation that included the resurrection of its former housing brand, Bett Homes.
Last September, covenant breaches by several of its subsidiaries forced Gladedale to hand lender Lloyds Banking Group a 30 per cent equity stake in return for writing off £533m of loans. Founder Remo Dipre, who quit Gladedale in April 2009, saw his shareholding in the company knocked out as a result.
The debt-for-equity swap was followed by management turmoil. Chief executive David Gaffney was replaced by Neil Fitzsimmons, the ex-boss of publicly listed housebuilder Redrow. Another former Redrow man, Alan Bowkett, replaced Dipre as chairman while Colin Lewis joined as chief operating officer.
Gladedale still had £569m of net debt at the end of 2009, all of it held by Lloyds. In accounts, the company’s directors said: “Although the group is financially secure following the recent restructuring, the group’s ability to comply with its banking covenants continues to represent a key risk to the business.”