Fears grow as Barratt is hit in £4.2bn meltdown

FEARS were raised today for the future of Barratt Developments as the housebuilding sector continues to suffer.

Around £4.2 billion has been wiped off the value of major housebuilders since January.

And analysts say Barratt, which has seen its share price plummet by 80 per cent this year, needs to raise at least £1bn if it is to survive.

The company has a market capitalisation of just £317 million and its current share price is at a record low.

It plunged out of the of the FTSE 100 six months ago and now lies close to the bottom of the FTSE 250.

Alastair Stewart, an analyst at Dresdner, said that the company would need a five-for-one rights issue at a 50 per cent discount to raise the funds it needs, which he said is "possibly unfeasible".

Instead, he said around £1bn could be raised through a debt-for-equity swap. He said: "With the share price falling with seemingly no means of support, we've withdrawn our target."