Inland secures waivers after breaching loan covenants

Troubled South east housebuilder Inland Homes saw its shares soar in value on Friday after it announced it had secured the agreement of two of its banks to waive covenant breaches to allow it to continue trading.

The £182m turnover firm said it had agreed waivers with two banks, Secure Trust Bank PLC and HSBC UK, for separate loans totalling nearly £50m.

The business has been in difficulty since a profit warning last September which saw the firm’s founder and chief executive, Stephen Wicks stand down from the business. Inland later appointed former Galliard chief executive Don O’Sullivan to replace him, prior to O’Sullivan departing the business in January without explanation just weeks into the job.

Inland, which has promoted the Master Brewer development (pictured), admitted it had breached a series of loan covenants on January 25, when it issued a trading update which revealed that its expected pre-tax losses for the financial year to September 30 2022 had ballooned from £37m to more than £90m.

Inland on Friday said it has agreed a waiver from Secure Trust Bank for a £26m loan on its Wilton Park scheme in Beaconsfield regarding a “historic” breach of the gearing covenant test at September 2022. The waiver will apply until September this year.

In addition, Inland said it had gained waivers from HSBC to two covenant breaches of a £22.7m revolving credit facility secured against a series of schemes, including Meridian Waterside in Southampton and Cressing in Essex. Inland had already been forced to agree a waiver on the interest cover covenant for the facility, which is due to expire this October in any event.

Now the firm said it had also been able to agree waivers for covenants on tangible net worth and gearing covenants, the former until October this year, and the latter until June 30.

Inland’s share price soared by 64% on Friday afternoon after making the announcement just before midday. However, the firm’s shares sank bank again 20% in trading this morning, and with a market value of just £27m, it is still worth less than half of what it was before the September profit warning.

Nish Malde, group finance director at Inland Homes, said: “Whilst the last financial year has been challenging, I am pleased to report that the Group has renegotiated its banking covenants with two core lenders.

“Both lenders have held long term supportive relationships with the Group over many years and continue to support Inland’s delivery of key schemes in the South and South East, creating much needed homes in a land market that is in short of consented plots. ”