Overhaul for Crest Nicholson

Marion Dakers
TROUBLED housebuilder Crest Nicholson faces another financial restructuring as new majority shareholder Varde examines the company’s finances, people close to the business said yesterday.

US-based Varde is working with advisers Lazard and Bingham McCutchen on the options for Crest, which became 90 per cent owned by its lenders following a £648m debt for equity swap in January 2009.

Varde bought 30 per cent of Crest’s equity and around a quarter of its debt in September for an undisclosed sum, when Lloyds Banking Group sold its exposure to the company. Varde has also acquired a small stake from Royal Bank of Scotland.

Crest still has around £350m of senior debt and £150m of payment in kind notes, which carry an interest margin of 250 basis points. Varde, which specialises in distressed real estate assets, is understood to be working with advisers to improve the standing of the debt.

Crest made a loss of £50.7m in the ten months to October 2009, the most recent figures available, though the non-listed firm has insisted it is performing strongly this year. The company, like many property firms, was hit badly by the slump in construction in the wake of the recession. Crest was also targeted by the investment vehicle owned by Pizza Express founder Hugh Osmond, but rejected a £350m takeover offer in July.

A spokesperson for Crest Nicholson declined to comment yesterday. Rick Noel, a partner at Varde, told City A.M. by e-mail: “We have spoke to Crest Nicholson and other debt holders about many things,” but could not confirm a restructuring was in the works.