McCarthy & Stone on course to secure £800m refinancing deal

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McCarthy & Stone, the beleaguered retirement housebuilder with investors including the philanthropist Sir Tom Hunter and media baron Richard Desmond, is expected to seal an £800m refinancing deal next month.

The Independent on Sunday revealed in June that McCarthy & Stone's chief executive, Howard Phillips, had called in bankers at NM Rothschild to help him restructure the company's debt in the wake of the crisis in the housebuilding sector. Taken private in a heavily indebted £1.2bn deal in 2006, the company has been concerned with repayments.

It is understood that Roths-child expects to have a heads of terms agreement in place with the company's banks by the end of September. Sources close to the restructuring said that bankers hoped this would then be formalised by the end of the year.

As part of the relaxing of bank terms, it is likely that the major shareholders, which include the embattled bank HBOS and property entrepreneurs the Reuben brothers, will have to pump more equity into the business. The key repayment dates are in 2012-14, and it is thought that these might be pushed back.

A source close to McCarthy & Stone said: "The company is working towards a deal, and it has not been as tough a negotiation as expected. There is an air of realism that this is a strong company so I'm optimistic that a preliminary deal will be ready by the end of September."

Rothschild is also believed to be advising McCarthy & Stone on the number of retirement homes, the sector in which it is the dominant player, it should be constructing during the downturn. There is a school of thought that the company should not cut back too much on housebuilding, so as to take advantage of the upswing when the market is again buoyant.

The housebuilding sector has suffered badly since the start of the year. The housing giant Taylor Wimpey last week announced a pre-tax loss in the first six months of the year of more than £1.5bn, compared to an £18.3m profit in the same period in 2007. It also wrote down the value of its land bank by £690m.