Struggling housebuilder Barratt Developments has hired investment bank NM Rothschild and a restructuring team from Deloitte to negotiate with its lenders, a banking syndicate led by HSBC, Royal Bank of Scotland, Barclays and Lloyds TSB, which has given preliminary approval to a deal.

The banks' credit committees were yesterday formally considering the plan. Sources close to Barratt, which has debt of £1.7bn and a market, told The Daily Telegraph that, barring any last-minute hitch, the company would announce the refinancing at its trading update next week.

The refinancing deal centres on £400m in fresh bank debt Barratt desperately needs to repay a £600m short-term acquisition finance facility taken out last year to fund the takeover of its rival Wilson Bowden, which expires in less than a year.

The banks have also given tentative agreement to plans for Barratt's net debt to net asset value covenants to be relaxed, covenants which the housebuilder reportedly would certainly have breached in December.

Further reading:

Deloitte closes in on top spot as £2bn barrier stands ready to fall

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