- Redrow says it received the approval for the Band of England's emergency financing scheme.
- The UK housebuilder placed 80% of its workforce on government-sponsored furlough.
- CCFF will provide £300 million in funding to Redrow as it seeks another £100 million from banks.
In its announcement on Thursday, Redrow (LON:RDW) said that the Bank of England (BoE) has approved the UK housebuilder for its emergency financing scheme. The company also said that 80% of its employees have now been placed on government-sponsored furloughs. Redrow is the first of the top UK housebuilders to have received the approval from the BoE.
According to the company, the COVID Corporate Financing Facility (CCFF) scheme will provide £300 million in funding to Redrow. The housebuilder further added that it has also approached 6 top banks to secure £100 million worth of additional funding. The negotiations, it commented, are going well.
According to Peel Hunt analysts:
“The additional bank facilities remove any lingering fears that the group would look to raise fresh equity.”
Redrow Climbed 9% On Market Open On Thursday
Following its announcement, Redrow was reported trading 9% up as the market opened on Thursday.
Prime Minister Boris Johnson ordered a nationwide lockdown that restricted public transport to minimize the fast transmission of the flu-like virus. Under such circumstances, construction sites have also resorted to temporarily shut down to protect the workers against the health hazard. Redrow had also closed sites and suspended dividends in late March.
The Coronavirus has so far infected more than 60,500 people in the United Kingdom with the death toll having surpassed 7,000.
Executive Chairman of Redrow, John Tutte also commented on the news on Thursday and stated:
“The positive progress we have made on securing additional banking facilities means we can now finalise plans for our valued workforce and supply chain.”
Redrow’s Board Agrees To A 20% Cut On Monthly Salary
To further cut costs and maintain the company’s financial stature during the economically challenging time, Redrow’s senior directors and the board at large have also agreed on slashing 20% of their monthly salaries.
At the time of writing, Redrow is trading at 445 pence per share in the stock market that translates to a more than 40% decline in 2020 so far. Starting the year at 767 pence per share, the housebuilder was able to keep its strength in the stock market in the first two months of 2020. As the confirmed COVID-19 cases and associated restrictions started to expand in March, the company posted a downward rally that pushed it as down as 316 pence per share in the third week of lasts month.