Announcement re: Rights Issue

RNS Number : 5112Z

Barratt Developments PLC

23 September 2009

THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, CANADA, JAPAN, NEW ZEALAND OR SOUTH AFRICA AND SHOULD NOT BE DISTRIBUTED IN, FORWARDED TO OR TRANSMITTED IN OR INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF LOCAL SECURITIES LAWS OR REGULATIONS. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

BARRATT DEVELOPMENTS PLC

PROPOSED PLACING AND RIGHTS ISSUE TO RAISE GROSS PROCEEDS OF £720.5 MILLION, AND AMENDED FINANCING ARRANGEMENTS

The Board of Barratt today announces a fully underwritten Placing and 1.3 for 1 Rights Issue to raise gross proceeds of approximately £720.5 million in aggregate through the issue of 618.4 million new ordinary shares. In conjunction with the equity issue, the Board also announces certain amendments to its existing financing arrangements, conditional on the completion of the Placing and the Rights Issue.

The Placing and the Rights Issue are subject to the approval of Shareholders at a General Meeting expected to be held on 19 October 2009.

Barratt has today also released its Annual Results Announcement and published its Report and Accounts in respect of the year ended 30 June 2009.

Highlights

Fully underwritten Placing and Rights Issue comprising a:

	-	Placing of 72,916,666 Placing Shares at 240 pence per Placing Share, representing a 10.6% discount to the Closing Price of 268.5 pence per Existing Ordinary Share on 22 September 2009 (being the last practicable day prior to the publication of this announcement) to raise gross proceeds of £175 million. The Placees will be Qualifying Shareholders for the purposes of the Rights Issue.
	-	1.3 for 1 Rights Issue of 545,525,090 New Ordinary Shares at 100 pence per New Ordinary Share, representing a 37.8% discount to the theoretical ex-rights price, when calculated by reference to the Placing Price, to raise gross proceeds of £545.5 million

Amended financing arrangements, with revised financial covenants and an extension to the maturity of revolving facilities, will enable Barratt to take advantage of opportunities that may arise in a recovering market and provide an appropriate alternative framework should a further downturn arise. The amended financing arrangements are conditional on the completion of the Placing and the Rights Issue.

The Placing and the Rights Issue will:

Substantially strengthen Barratt's balance sheet and reduce its financial indebtedness
Allow the Group to develop its existing sites
Better position Barratt to take advantage of land purchasing opportunities as and when they arise

Current trading

The second half of the 2009 financial year has seen a degree of stability return to the UK housing market. The Company was able to maintain price levels after significant falls in the first half year, whilst achieving improved reservation rates per outlet.

This trend has continued since the start of the new financial year with reservation rates in the first eleven weeks both above budget and those in the same period the previous year. Overall reservation prices are running ahead of internal expectations.

Forward sales at 30 June 2009 were £464.3m (2008: £697.6m) representing 3,328 plots (2008: 4,586 plots). As at 13 September 2009 forward sales had increased to £733.4m.

Total completions for the 2010 financial year are currently expected to be approximately 12,000 with a similar mix between social and private completions, but consistent with the replanning and build programme undertaken since the second half of the 2009 financial year, a shift in product mix towards a higher proportion of houses. Barratt anticipates this shift will slightly improve average selling prices for the period.

Nevertheless, the encouraging signs being experienced are subject to continued uncertainty in the wider economic climate. There is unlikely to be a sustained recovery in the UK housing market until mortgage finance is more readily available particularly in the higher loan to value segment and consumer confidence is more fully restored.

Mark Clare, Chief Executive of Barratt Developments, commented:

'This has been an intensely difficult year for the Group following the sharp decline in the UK housing market. In the first half, as prices fell, we drove sales and reduced stock and debt levels. In the second half we have been able to maintain price levels and increase our reservation rates, with these encouraging trends continuing through the summer into the autumn.'

'The Board has therefore decided it is now an appropriate time to substantially strengthen the Company's balance sheet and reduce its debt levels via a Placing and a Rights Issue. This will also enable the Group to develop a number of its existing sites and to take advantage of land purchasing opportunities as they arise.'

Credit Suisse and UBS are acting as Joint Sponsors, Joint Bookrunners and Placing Agents to the Placing and Rights Issue. Barclays Capital, HSBC Bank Plc, Lloyds TSB Corporate Markets, and RBS Hoare Govett Limited are acting as Co-Lead Managers to the Rights Issue. The Placing is fully underwritten by Credit Suisse and UBS, the Placing Agents. The Rights Issue is fully underwritten by Credit Suisse, UBS, Barclays Capital, HSBC Bank Plc, Lloyds TSB Bank PLC, and RBS Hoare Govett Limited.

Analyst presentation

There will be an analyst and investor meeting at 10:00 a.m. today at UBS, Ground Floor Presentation Suite, 1 Finsbury Avenue, London EC2M 2PP.

A live audiocast of the presentation will be available at www.barrattdevelopments.co.uk/ir/equityraise/. Slides will be put onto the website approximately 15 minutes before the presentation is due to begin.

Appendix I contains summary timetable of expected principal events and Appendix II contains the definitions of certain defined terms used in this announcement. This summary should be read in conjunction with the full text of this announcement.

Enquiries:

Barratt Developments	+44 (0) 20 7299 4898
David Thomas
Philip Bowcock

Maitland	+44 (0) 20 7379 5151
Neil Bennett
Liz Morley

Credit Suisse:	+44 (0) 20 7888 8888
John Hannaford
Richard Probert
Will MacLaren

UBS Investment Bank:	+44 (0) 20 7567 8000
Christopher Smith
Jackie Lee
John Woolland

Further details of the Placing and the Rights Issue will be set out in a Circular which will be sent to Shareholders and in a Prospectus (which will also contain details of the Placing Shares, the Nil Paid Rights, the Fully Paid Rights and the New Ordinary Shares). The Prospectus will not be posted to Shareholders but will be published on Barratt's website (www.barrattdevelopments.co.uk/ir/equityraise/). Subject to certain exceptions, Shareholders in the United States, Canada and in Excluded Territories will not be permitted to access the Prospectus.

This announcement and the information contained in it is not for distribution (directly or indirectly) in or into the United States, Canada, Japan, New Zealand or South Africa. It does not constitute an offer for sale of securities, nor a solicitation to purchase or subscribe for securities, in any jurisdiction.

Application will be made to the UK Listing Authority for the Placing Shares to be admitted to listing on the Official List and to the London Stock Exchange for the Placing Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Placing Admission will become effective, and that dealings in the Placing Shares on the London Stock Exchange's main market for listed securities will commence, at 8.00 a.m. on 20 October 2009. Application will also be made to the UK Listing Authority for the New Ordinary Shares to be admitted to listing on the Official List and to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that admission to listing on the Official List of the New Ordinary Shares will become effective, and that dealings in the New Ordinary Shares, nil paid, on the London Stock Exchange's main market for listed securities will commence, at 8.00 a.m. on 20 October 2009. It is expected that dealings in the New Ordinary Shares, fully paid, on the London Stock Exchange's main market for listed securities, will commence at 8.00 a.m. on 4 November 2009.

None of the Placing Shares, the Nil Paid Rights, the Fully Paid Rights, the Provisional Allotment Letters or the New Ordinary Shares have been, and will not be, registered under the United States Securities Act of 1933, as amended (the 'Securities Act'), and may not be offered or sold in the United States absent registration or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Company does not intend to register any part of the Placing or the Rights Issue in the United States or to conduct a public offering of securities in the United States. Any offering of securities will be made by means of the Prospectus that may be obtained from the Company and will contain detailed information about the Company and management as well as financial statements. No money, securities or other consideration is being solicited and, if sent in response to the information contained herein, will not be accepted.

Proposed Placing of 72,916,666 Placing Shares at 240 pence per Placing Share
Proposed 1.3 for 1 Rights Issue of 545,525,090 New Ordinary Shares
at 100 pence per New Ordinary Share
to raise gross proceeds of approximately £720.5 million

Amended Financing Arrangements

Introduction

The Board of Barratt today announces that it proposes to raise net proceeds of approximately £693.5 million in aggregate by way of a Placing at 240 pence per Placing Share and a 1.3 for 1 Rights Issue at 100 pence per New Ordinary Share. The Placing Price of 240 pence represents a 10.6% discount to the Closing Price of 268.5 pence per Existing Ordinary Share on 22 September 2009 (being the last practicable date prior to the publication of this announcement). The Rights Issue Price of 100 pence represents a 62.8% discount to the Closing Price of 268.5 pence per Existing Ordinary Share on that date and a 37.8% discount to the theoretical ex rights price under the Rights Issue, calculated by reference to the Placing Price.

The Placing is fully underwritten by Credit Suisse and UBS. The Rights Issue is fully underwritten by Credit Suisse, UBS, Barclays Capital, HSBC Bank Plc, Lloyds TSB Bank PLC, and RBS Hoare Govett Limited. Credit Suisse and UBS are acting as joint sponsors and joint bookrunners to the Placing and the Rights Issue. Barclays Capital, HSBC Bank Plc, Lloyds TSB Corporate Markets, and RBS Hoare Govett Limited are acting as Co-Lead Managers to the Rights Issue.

Further details of the Placing and the Rights Issue will be set out in a Prospectus to be published and a Circular which will be sent to Shareholders in due course.

Background to the Placing and the Rights Issue

Background

Barratt is one of the largest housebuilders by volume in the UK. Barratt Group has a network of 25 housebuilding divisions in key locations which enables it to provide full geographic coverage throughout Britain, including London where it has a strong presence. Following Barratt's acquisition of Wilson Bowden for approximately £2 billion in April 2007, it rapidly integrated the businesses, delivering synergies of £33 million against a target of £30 million set for the 2008 financial year. Having streamlined the divisional structure as part of the integration process, Barratt has undertaken a further downsizing of the combined housebuilding business in response to the ongoing difficult trading conditions experienced since the Autumn of 2007.

Barratt's housebuilding business is engaged in the acquisition and development of land and the planning, design, construction and selling of a wide range of new homes, to both private buyers (including investors) and the social housing sector, primarily under its two major national brands, Barratt Homes and David Wilson Homes. These core activities are supported by Barratt's commercial development, urban regeneration, procurement, design and strategic land capabilities.

Economic environment

Barratt's operations have been severely affected, in common with other UK housebuilders, by the deterioration in the credit markets and increasing lender restrictions, the reduced availability of mortgage finance and the decline in consumer confidence. The UK currently remains in recession, with its Gross Domestic Product (GDP) retracting by 0.7% in the second quarter of 2009 compared to the first quarter of 2009 and by 5.5% compared to the second quarter of 2008, the latter being the largest annual fall in UK GDP on record1.

While there are some initial indications that consumer confidence is slowly returning, the availability of mortgage financing remains restricted, unemployment levels are still rising and the overall economic outlook remains uncertain.

Downturn in the housebuilding industry

The UK housebuilding sector has historically been cyclical, with its performance moving broadly in line with general economic conditions, and has tended to be one of the sectors affected earliest by a downturn. The issues in the wider economic environment since the Autumn of 2007 have had a direct adverse impact on the sector, leaving it in a severely weakened state.

Since Autumn 2007, the reduced availability of mortgage finance, lower numbers of both mortgage products and traditional UK mortgage lenders, more restrictive lending criteria being applied by lenders (and the conservative mortgage valuations being made on their behalf) have had a significant adverse effect on the demand for homes. The decline in the number of the higher loan to value ratio mortgages which are required by many first time buyers has been more marked. The monthly level of gross mortgage lending fell by approximately 45% from £14,672 million in June 2008 to £8,065 million in June 2009 while the number of seasonally adjusted mortgage approvals fell from 108,169 to 84,102 (a 22% drop) over the same period2.

Nationwide house price data (for all houses) showed an annual fall in house prices of 15.9% in the 12 month period to December 20083 while Halifax house price data (for all houses) showed an annual fall of 16.2% for the same period4. The Nationwide House Price Index (seasonally adjusted) fell by 9.3% in the period from June 2008 to June 20095 while the Halifax House Price Index (seasonally adjusted) fell by 12.4% over the same period6 with average house prices (for all houses) falling from £180,320 to £157,876 over that period, according to Halifax house price data7 and from £172,415 to £156,442, according to Nationwide house price data8. Aggressive discounting by housebuilders destocking during the downturn in order to manage their working capital has contributed to this downward pressure on pricing. However, there have been some recent signs of a stabilisation in the rate of house price decline. The Nationwide House Price Index showed a rise in prices of 1.6% in August 2009 compared to the previous month, which was the fourth consecutive monthly increase9.

Many of those looking to buy a new home are presently unable to obtain a mortgage. Potential homebuyers may also be constrained by an inability to sell their existing homes or they may be choosing to delay their purchase due to the uncertain economic environment or concerns as to job security. However, new buyer enquiries increased for ten consecutive months to August 200910 according to the Royal Institute of Chartered Surveyors, albeit from historically low levels, and in July 2009 newly agreed sales (measured on a net balance of surveyors reporting basis), reached the highest level since August 199911.

The National House-Building Council ('NHBC') received just 106,894 applications to start new homes in the year to December 2008 (a fall of 47% against the 200,697 received in the previous year) and recorded 149,238 house building completions for the 2008 calendar year - a fall of 20% against the 186,505 recorded in the previous year12. This significantly reduced build activity has led to more limited stock levels of new housing. Due to these scaled back build rates and the need to conserve cash, there has been very limited activity in the land buying market. Existing landbanks have gradually been eroded rather than replenished on an ongoing basis. This reduced activity and other cost reduction measures implemented by housebuilders have had a direct adverse impact on the sector's supply chain, with a number of suppliers and subcontractors going out of business or leaving the sector. As and when an upturn occurs, these factors may inhibit recovery and competition will be strong for appropriate land, materials and skilled personnel.

Impact on Barratt

The progressively deteriorating market conditions from Autumn 2007 materially impacted the Group's operating results in the 2008 and 2009 financial years:

the Group's completions in the 2009 financial year decreased by 29.0% to 13,202 from 18,588 in the 2008 financial year (2007 financial year: 17,168, on a like for like basis, including those achieved by Wilson Bowden prior to the WB Acquisition)
the Group's average selling price in the 2009 financial year decreased by 14.1% to £157,200 from £183,100 in the 2008 financial year and by 9.0% compared with £172,800 in the 2007 financial year
the Group's Adjusted Operating Margin for the housebuilding business decreased to 1.9% in the 2009 financial year from 15.5% in the 2008 financial year (2007 financial year: 16.9%13)
the Group's loss for the year before tax and exceptional items in the 2009 financial year was £144.1 million compared with a profit of £392.3 million in the 2008 financial year and a profit of £451.0 million14 in the 2007 financial year
£499.5 million in exceptional impairments of inventories were recorded in the 2009 financial year compared with exceptional impairments of inventories of £208.4 million in the 2008 financial year and £nil in the 2007 financial year
in addition, in the 2009 financial year, the Group recorded exceptional restructuring costs in relation to reorganising and restructuring the business of £27.1 million (2008 financial year: £15.9 million; 2007 financial year: £26.2 million), including redundancy costs of £17.6 million (2008 financial year: £3.7 million; 2007 financial year: £12.2 million). In the 2008 financial year, the Group recorded an exceptional impairment of goodwill of £24.5 million (2007 financial year: £nil) and an exceptional impairment of other intangible assets of £6.2 million (2007 financial year: £nil)
the Group incurred exceptional finance costs of £13.3 million related to the make-whole fee on the early partial redemption of private placement notes in the 2009 financial year (2008 financial year: £nil, 2007 financial year: £nil) and post-tax £2.0 million of impairment costs following a fall in the net realisable value of land and work in progress in a joint venture (2008 financial year: £nil, 2007 financial year: £nil)
an exceptional tax credit of £148.3 million was recognised in the 2009 financial year as a result of the exceptional items mentioned above other than the impairment of goodwill (relating to Wilson Bowden Developments) and tax disallowable restructuring costs (2008 financial year: £66.8 million and 2007 financial year: £6.5 million)
Group stock levels fell significantly during the 2009 financial year, with reduced work in progress standing at £1,044.2 million at June 2009 compared to £1,569.3 million at June 2008 (June 2007: £1,368.5 million); unreserved finished stock fell to 822 homes at June 2009 from 1,821 homes at June 2008 (June 2007: 1,388 homes). In addition, the level of 'roof to complete' stock units also declined (by 61.1%) over the same period to 2,008 units at June 2009, from 5,157 units at June 2008

Barratt's actions during the downturn

Barratt responded swiftly to the challenging trading environment by driving sales, reducing costs and focusing on cash generation to reduce indebtedness, with a view to preserving and ultimately maximising value for shareholders.

Selling prices

Barratt reduced selling prices to reduce stock levels in a market where sales volumes were declining. Private net reservations per site per week increased by 10.5% in the 2009 financial year, 6.0% down for the first half and 28.6% up in the second half when compared with the equivalent period in the 2008 financial year. The lower average selling prices reduced the Group's Adjusted Operating Margin from 15.5% in the 2008 financial year to 1.5% in the 2009 financial year. However, the combination of more stable selling prices in the second half of the year and the focus on costs throughout the year enabled Barratt to increase Adjusted Operating Margin during the second half of the 2009 financial year to 1.7% compared with 1.3% in the first half of the 2009 financial year.

Throughout the downturn Barratt has sought to leverage its acknowledged sales and marketing skills, employing a combination of focused marketing campaigns, targeted incentives and discounts and tools such as shared equity products, part exchange and other innovative offers to support sales. More recently, Government sponsored initiatives such as HomeBuy Direct have begun to be utilised to this end.

Cost reductions

Building on the synergies achieved by the operational integration of the Wilson Bowden business, Barratt increased its focus on cost reduction, implementing the following series of measures:

further reduction of overheads and contraction of the divisional structure resulting in a reduction in average headcount of approximately 1,846 or 28.8% during the 2009 financial year
renegotiation of subcontractor rates and supplier contracts to reduce materials costs
reduction in build costs through improved build processes, including changing specifications. For example, since June 2007, the Group has reduced the basic housebuild costs of a standard house type by approximately 15%
replanning of sites (for example, to move the mix on sites towards houses and away from more capital intensive apartment developments)
reducing investment in land, only acquiring land where pre-existing contractual commitments exist (and, where possible, re-negotiating terms to cancel or defer such commitments) or, more recently, where attractively priced opportunities can be secured on deferred terms
deferring development of sites requiring a significant level of upfront expenditure (for example, on infrastructure)
maintaining tight control over stock and work in progress, by building only what could be sold quickly and pricing unsold stock realistically both to reduce stock levels and to accelerate exit from existing sites

Cash and debt

Barratt has sought to maximise its cash generation potential with a view to reducing net debt and thereby strengthening its balance sheet. In addition to conserving cash generated from operations by cutting costs, reducing land spend and tightly controlling working capital as referred to above, no dividends have been paid since the 2008 interim dividend. The Group has also sold certain assets from the Wilson Bowden Developments commercial property portfolio, realising aggregate cash proceeds of £181.1 million over the financial year ended 30 June 2009 through this divestment programme.

In July and August 2008, Barratt acted swiftly in response to the challenging environment and was one of the first major housebuilders to restructure its financing arrangements. This involved the entry into a new £400 million three year committed revolving credit facility, an extension to the maturity date for £350 million of its existing £400 million revolving credit facility so as to coincide with the maturity date of the new facility and a renegotiation of the covenants contained in Barratt's committed bank facilities and private placement notes onto a basis which the Board considered more appropriate for the difficult environment then being experienced. This included the addition of a cash flow covenant, suspension of the existing interest cover covenant test and relaxing the gearing and minimum tangible net worth covenants.

Net debt as at 30 June 2009 was £1.28 billion, a reduction of 22%, when compared with £1.65 billion as at 30 June 2008, reflecting lower levels of work in progress, reduced investment in new land and the proceeds realised from the disposal of assets from the Wilson Bowden Developments commercial property portfolio.

Current trading

Forward sales at 30 June 2009 were £464.3m (2008: £697.6m) representing 3,328 plots (2008: 4,586 plots). As at 13 September 2009 forward sales had increased to £733.4m.

Planning for recovery

Despite the uncertain short term outlook, the Directors believe that in the longer term, the underlying imbalance between supply and demand will ultimately drive future growth for the housebuilding industry and that attractive opportunities are likely to arise in a recovering market for those well-positioned to take advantage of them. Prior to the downturn, housing stock was growing by 185,000 units a year against Government forecasts of a required 240,000 units per year by 2016 in order to meet the projected demand of the growing UK population15. Only 80,000 new housebuilding starts are forecast for the 2008/2009 UK financial year16. The Directors believe that the desire for home ownership is very strong.

To enable Barratt to recover as fast as possible from the downturn when the market begins to improve, Barratt's management has identified the following areas of operational focus:

Land and planning: If build activity scales back up, in order to satisfy increased demand, it will be necessary to identify and secure opportunities in the land buying market, including for strategic land, on appropriate terms to replenish the Group's landbank to meet more normalised build levels. In the four months preceding the date of this document, approximately £100 million of land spend has been approved. Barratt intends to exploit fully its planning capabilities in order to extract maximum value from both existing and newly acquired sites. Replanning of existing sites in order to accelerate development and release value may result in the carrying values of such sites being written down in certain cases.

Sales and marketing: The sales function is expected to benefit in an improving market from the efficiencies achieved during the downturn. The Board believes that a combination of a step up in training support and the deployment of new technology on site will enable the Group to improve conversion rates. In addition, a shift in marketing focus away from deal-led advertising should support a fun improvement in sales performance.

People and resources: Barratt has continued to develop and invest in its people and their expertise notwithstanding the downturn in order to ensure appropriate and adequate resources are available to meet the demands of recovery, when retention and recruitment of the right person for each job will be key. Increased professional and skilled resources, including in areas such as land buying, will be required and Barratt's graduate and apprenticeship programmes will need to be relaunched.

Labour and materials: The competition for suppliers and sub-contractors is expected to intensify when activity levels increase and shortages of labour, appropriate skills and materials, as well as cost pressures, may result. While Barratt's strong procurement function and existing national procurement agreements with major suppliers will provide a firm base, Barratt intends to strengthen existing relationships and develop new ones as the market opens up.

Amended financing arrangements

As part of planning for recovery, Barratt has also considered its capital resources and financial flexibility. Although Barratt continues to operate within the financial covenants in its existing financing arrangements, the Board has concluded that a further restructuring of the covenant package is now an appropriate and timely measure.

Accordingly, Barratt has agreed certain amendments to the terms of the Group's existing financing arrangements. The amended financing arrangements will only come into effect if, before 31 December 2009, Barratt reduces its borrowings under the WB Acquisition Facilities and the private placement notes by 40% such that the total amount of indebtedness outstanding thereunder does not exceed £900 million (excluding any indebtedness under make-whole notes that are issued as a consequence of the prepayment and calculated using the rate of exchange used in Barratt's foreign currency derivative transactions to the extent of borrowings denominated in US Dollars). Following completion of the Placing, and immediately upon the Company becoming entitled to the net proceeds of the Placing, such proceeds will be transferred to an escrow account with the facility agent for the WB Acquisition Facilities and held in such account until the Company also becomes entitled to the net proceeds of the Rights Issue, at which time the appropriate proportion of the net proceeds of the Rights Issue will also be transferred to the escrow account and the aggregate balance in the escrow account will then be applied in accordance with the escrow terms to effect the prepayments required to bring the amended financing arrangements into effect. Undrawn commitments of £50 million under each of Barratt's two revolving credit facilities will be automatically cancelled on the date on which these prepayments are made so that the total revolving credit commitments under both facilities does not exceed £700 million.

The amended financing arrangements are intended to provide Barratt with the ability to take advantage of opportunities that may arise in a recovering market, as well as to provide an appropriate alternative framework, should a further downturn arise. In particular, the amended financing arrangements provide for an extension to the maturity date under Barratt's revolving credit facilities and a revised set of financial covenants (applicable across all of the financing arrangements) which accommodate increased investment in, and development of, the Group's landbank while also providing flexibility should the Group incur future land or work in progress impairments. Amendments are also made to the general covenants with the intention of providing the Group with appropriate operational flexibility to make acquisitions, invest in developments and joint ventures, and participate in government programmes to support the housebuilding and residential property sector. As described below, certain restrictions in respect of dividend payments by Barratt will apply under the amended financing arrangements.

As a consequence of amending the terms of its financing arrangements and effecting the prepayments and cancellations described above Barratt will incur various fees, costs and other expenses. Amendment and other fees and costs, expected to be up to £23 million in aggregate, will be paid to Barratt's bank lenders and private placement noteholders. Barratt would have expected to incur fees and costs of this nature during the current financial year, since it would have needed to renegotiate the terms of its existing financial arrangements during this period in any event.

As a consequence of the prepayment of the WB Acquisition Facilities, Barratt will have made prepayment offers to each of the private placement noteholders, which offers will have included make-whole amounts in respect of the private placement notes which are the subject of the prepayment offer. Noteholders will have the option to receive a cash payment in satisfaction of the make-whole obligation instead of make-whole notes. To the extent that cash make-whole payments are made, the amount of those payments is not expected to exceed £22 million, based on current interest and foreign exchange rates. To the extent that noteholders decide not to receive a cash make-whole amount and instead choose to take make-whole notes, the maximum aggregate principal amount of such make-whole notes is not expected to exceed £26 million, based on current interest and foreign exchange rates. The cost of issuing make-whole notes will not result in a cash item until such make-whole notes are redeemed. Any cash costs in respect of make-whole amounts represent an acceleration of costs which would have been incurred over the life of the private placement notes but for the prepayments.

As a consequence of the prepayments to be made to ensure the amended financing arrangements come into effect, the Group will cancel certain interest rate and foreign exchange swap positions relating to its existing indebtedness. The associated early termination costs cannot be determined until the relevant hedging arrangements are closed out (as early termination payments will depend, among other things, on the interest rates and foreign exchange rates prevailing at that time) but Barratt does not expect these to exceed £55 million, based on current rates. The swap termination costs represent costs that crystallise as a consequence of the prepayments required in order to bring the amended financing arrangements into effect.

The then remaining balance of unamortised costs in respect of the restructuring of the Group's financing arrangements in 2008 (which stood at £36 million as at 30 June 2009) will be written off upon the amended financing arrangements becoming effective. Such costs will be a non-cash item.

The amended financing arrangements are described in more detail in the Circular and the Prospectus

Reasons for the Placing and the Rights Issue and use of proceeds

Given the severity of the downturn, the deterioration in the housebuilding sector and the adverse impact on Barratt, the Directors believe it is now appropriate for the Group to recapitalise its business through a capital raising via the Placing and the Rights Issue. In order for the amended financing arrangements to come into effect, both the Placing and the Rights Issue need to complete.

In the first instance, the Group intends to use the net proceeds of the Placing and the Rights Issue to reduce the total amount of indebtedness outstanding under the WB Acquisition Facilities and the private placement notes by 40% such that the total amount of indebtedness outstanding thereunder does not exceed £900 million (excluding any indebtedness under make-whole notes that are issued as a consequence of the prepayment and calculated using the rate of exchange used in Barratt's foreign currency derivative transactions to the extent of borrowings denominated in US Dollars), as required in order for the amended financing arrangements to come into effect.

Following completion of the Placing, and immediately upon the Company becoming entitled to the net proceeds of the Placing, such proceeds will be transferred to an escrow account with the facility agent for the WB Acquisition Facilities and held in such account until the Company also becomes entitled to the net proceeds of the Rights Issue, at which time the appropriate proportion of the net proceeds of the Rights Issue will also be transferred to the escrow account and the aggregate balance in the escrow account will then be applied in accordance with the escrow terms to effect the required prepayments, such that approximately £590 million will be prepaid under the WB Acquisition Facilities and the private placement notes. It is expected that a prepayment of approximately £495 million will be made under the WB Acquisition Facilities and approximately £95 million of private placement notes will be prepaid. However, if one or more noteholders has given prior notice to Barratt that it does not wish to accept the prepayment, the total prepayment in respect of the private placement notes will reduce and the prepayment under the WB Acquisition Facilities will increase by the aggregate amount declined by that noteholder or those noteholders. Payments will also be made in respect of any make-whole amounts that are required to be satisfied in cash, which are not expected to exceed in aggregate £22 million, based on current foreign exchange rates. Barratt will also pay amendment and other fees and costs to its bank lenders and private placement noteholders, which are expected to be up to £23 million in total. In addition, swap termination costs, not expected to exceed £55 million in aggregate (based on current rates), will be incurred when Barratt cancels certain interest rate and foreign exchange swap positions as a consequence of the prepayments described above. To the extent that the balance of net proceeds after prepayments is insufficient to meet the aggregate amount of such fees, cash make-whole amounts and swap termination costs, any shortfall will be funded from Barratt's revolving credit facilities.

Any balance of the net proceeds of the Placing and the Rights Issue will be utilised to reduce any amounts drawn down at the relevant time under the Group's revolving credit facilities, thereby increasing the headroom and available working capital under those facilities. The headroom and working capital available under the Group's revolving credit facilities will be utilised by Barratt to invest over the medium term in the development of existing land sites and appropriate land purchasing opportunities as and when they arise, in line with Barratt's strategic growth objectives.

Specifically, the Placing and the Rights Issue will:

Substantially strengthen Barratt's balance sheet and reduce its financial indebtedness

The Placing and the Rights Issue will strengthen the Group's balance sheet as a result of a more robust capital structure achieved through the repayment of debt and resulting reduction in financing costs. The revised covenant package in Barratt's amended financing arrangements will provide greater operational and financial flexibility in the future. Barratt will return to a level of gearing which the Directors consider more sustainable and more appropriate for the current economic climate.

Allow the Group to develop its existing sites

Following the Placing and the Rights Issue, the Group will be in a better position to rebuild its inventory to levels more appropriate for a growth environment. The Group also expects to recommence investment in existing sites where development has to date been deferred due to the significant upfront expenditure required. This will be done on a prudent and highly controlled basis, with careful matching of supply and demand levels, with a view to maximising the value potential of these sites. Barratt will also be better positioned to drive growth and operating efficiency by undertaking the construction process on a more continuous and consistent basis rather than the intermittent 'build to order' approach adopted during the downturn.

Improve Barratt's competitive positioning and enable it to take advantage of land purchasing opportunities as and when they arise in a period of market recovery

The increased flexibility provided by the Group's amended financing arrangements, which will come into effect in the circumstances discussed above, and the cash resources available to the Group from the increased headroom and working capital available under its revolving credit facilities, are expected to enable it to take advantage of attractively priced land purchasing opportunities, including in respect of strategic land, as and when they arise in the market. This is expected to provide Barratt with greater operational flexibility to benefit from an upturn in the housebuilding industry and to position the business strategically for growth in the future. In line with its strategic objectives, Barratt will seek to replenish its landbank to levels which under normalised trading conditions would represent 3.5 to 4 years' supply, supplemented by its strategic land portfolio. New investment in land will only be made where it can deliver at or above the challenging investment return rates defined by the Board.

Accordingly, the Directors believe that the Placing and the Rights Issue will have both immediate and longer-term benefits for the Group.

Strategy

Barratt is focussed on remaining one of the UK's largest housebuilders by volume through maintaining its broad range of quality products, the strength of its geographic coverage and brand leadership.

Barratt's strategy is to:

Use the scale of its operations to enhance efficiency, reduce costs and deliver sustainable and superior long term margins
Take advantage of the existing attributes of its skillset such as good customer service, innovative product design, brand leadership, and acknowledged sales and marketing capability to maximise the value achieved for its products
Maximise through its existing planning and land optimisation capability the value of the existing landbank while continuing to invest in new land, in particular strategic land which is less capital intensive, to support Barratt's growth objectives
Secure competitive advantage by becoming the partner of choice for both public and private bodies through delivering well regarded, low cost solutions to meet complex regulatory, environmental and regeneration requirements
Ensure Barratt has an industry leading workforce through further investment in recruitment, retention and training

Dividend policy

Barratt suspended dividend payments in June 2008 as part of its cash conservation policy. The Board remains focussed on strengthening the balance sheet and conserving cash. In addition, the Group's existing financing arrangements impose certain restrictions on the payment of dividends. In light of these restrictions, no final dividend will be paid in respect of the financial year ended 30 June 2009, which is consistent with the rationale underpinning the Placing and the Rights Issue.

The terms of the Group's amended financing arrangements (which will become effective in the circumstances described in 'Amended Financing Arrangements' above) continue to restrict payment of dividends and prohibit any dividend being declared in respect of the financial year ending 30 June 2010. Thereafter, no restriction on dividends will apply.

Barratt's ability to return to paying regular dividends in future, once permitted by its financing arrangements, will depend, among other things, on improved financial performance. The Board is committed to reinstating the payment of dividends and will do so when it becomes appropriate and permissible to do so.

Summary structure of the Placing and the Rights Issue

The Directors have carefully considered the best way to structure the proposed equity fund raising. The decision to structure the issue by way of a combination of a Placing and a Rights Issue reflects a number of factors, including the total net proceeds to be raised and the composition of Barratt's share register. The Directors believe that due to capacity and sub-underwriting constraints in respect of certain of Barratt's existing Shareholders it is necessary to introduce some new investors. While recognising the importance of pre-emption rights, the Directors believe that to attract new investors the issue structure needs to include a firm allocation of Ordinary Shares under the Placing combined with the ability for Placees to participate in the Rights Issue. The Directors have sought to restrict the size of the Placing to a minimum in order to minimise the dilution to existing Shareholders and are also seeking the approval of Shareholders to the proposed structure of the equity fund raising, including this non pre-emptive element, by way of a special resolution.

Under the Placing, the Placing Agents have agreed to use reasonable endeavours to procure Placees for an aggregate of 72,196,666 Placing Shares at a price of 240 pence per Placing Share. Under the Rights Issue, Qualifying Shareholders will be offered New Ordinary Shares by way of rights at a price of 100 pence per New Ordinary Share on the basis of 1.3 New Ordinary Shares for every 1 Ordinary Share held on the Record Date. The Placing and the Rights Issue have been fully underwritten on the terms and conditions of the Underwriting Agreement.

The price at which the Placing Shares will be issued to Placees represents a 10.6% discount to the Closing Price of 268.5 pence of an Existing Ordinary Share on 22 September 2009 (being the last practicable date prior to the announcement of the Placing and the Rights Issue). The Placing Price (and the size of the Placing discount) have been determined, following discussions with both existing and potential new Shareholders, at the level which the Directors consider necessary to attract new investors in order to ensure the success of the Placing and the Rights Issue, taking into account the total net proceeds to be raised. The Directors believe the Placing Price and the discount which it represents is appropriate. The price per Placing Share is not directly connected to the Rights Issue Price. The Rights Issue Price represents a 62.8% discount to the Closing Price of 268.5 pence per Existing Ordinary Share on that date and has been set at a discount of 37.8% to the theoretical ex-rights price under the Rights Issue, calculated by reference to the Placing Price.

If a Qualifying Shareholder (who is not a Placee) does not take up any New Ordinary Shares under the Rights Issue, such Qualifying Shareholder's shareholding in the Company will be diluted up to 64.1% as a result of the Placing and the Rights Issue. Furthermore, Qualifying Shareholders who take up their entitlements in full in respect of the Rights Issue will suffer a dilution of 17.4% to their shareholdings in the Company as a result of the Placing unless the Qualifying Shareholder participates in the Placing on a pro rata basis.

Further details on each of the Placing and the Rights Issue will be set out in a Prospectus to be published and a Circular which will be sent to Shareholders in due course.

Major Shareholder

Mr D. Wilson, who held 5.61% of the Company's issued Ordinary Shares as at 22 September 2009, has irrevocably undertaken with the Joint Bookrunners to subscribe for New Ordinary Shares to which he is entitled under the Rights Issue to an aggregate value of £10 million. In respect of the balance of his entitlement to New Ordinary Shares in the Rights Issue Mr. Wilson intends to subscribe for no less than that number of New Ordinary Shares as can be funded by the sale of Nil Paid Rights.

Directors' intentions

Each of the Directors who is a shareholder intends to take up in full his entitlement to subscribe for New Ordinary Shares under the Rights Issue which comprise approximately 1,063,287 Existing Ordinary Shares in aggregate, representing 0.31% of the issued share capital of the Company as at 22 September 2009 (being the last practicable date prior to the announcement of the Placing and the Rights Issue).

Details of the Placing

Under the Placing, the Placing Agents have agreed to use reasonable endeavours to procure Placees for an aggregate of 72,196,666 Placing Shares at a price of 240 pence per Placing Share to raise gross proceeds of £175,000,000. The Placing Shares will represent approximately 17.4% of the Company's issued share capital immediately following completion of the Placing and approximately 7.6% of the Company's issued share capital immediately following completion of the Placing and the Rights Issue (assuming that no further Ordinary Shares are issued as a result of the exercise of any options under the Barratt Share Schemes in the period from the publication of the Placing and Rights Issue prospectus to completion of the Placing and the Rights Issue).

The Placing is fully underwritten by the Placing Agents on the terms and conditions of the Underwriting Agreement.

The Placing Price represents a 10.6% discount to the Closing Price of 268.5 pence per Existing Ordinary Share on 22 September 2009 (being the last practicable date prior to the announcement of the Placing and the Rights Issue).

The Placing is conditional among other things on:

the passing (without material amendment) of the Resolution; and
the Underwriting Agreement not having been terminated by the time at which the Resolution is passed.

An application will be made to the UK Listing Authority for the Placing Shares to be admitted to listing on the Official List and an application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Placing Admission will become effective and dealings in the Placing Shares will commence at 8.00 a.m. on 20 October 2009, the first Business Day following the General Meeting.

The Placing Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares. The Placees will be Qualifying Shareholders for the purposes of the Rights Issue.

The Placing is not conditional on the Rights Issue proceeding or upon Placing Admission. At the time that the Placing Shares are unconditionally issued and allotted to Placees, the Rights Issue will remain conditional only upon Placing Admission and Admission of the New Ordinary Shares (nil paid).

Principal terms of the Rights Issue

The Company is proposing to offer 545,525,090 New Ordinary Shares by way of rights to Qualifying Shareholders at a price of 100 pence per New Ordinary Share, payable in full on acceptance by no later than 11.00 a.m. on 3 November 2009. The Rights Issue is expected to raise gross proceeds of £545,525,090. The Rights Issue Price represents:

a 37.8% discount to the theoretical ex-rights price calculated by reference to the Placing Price;
a 42.3% discount to the theoretical ex-rights price calculated by reference to the Closing Price of 268.5 pence per Existing Ordinary Share on 22 September 2009, being the last practicable date prior to the announcement of the Placing and the Rights Issue;
a 41.6% discount to the theoretical ex-rights price calculated by reference to the Closing Price of 268.5 pence per Existing Ordinary Share on 22 September 2009, being the last practicable date prior to the announcement of the Placing and the Rights Issue as adjusted to take account of the Placing at 240 pence per Placing Share; and
a 62.8% discount to the Closing Price of 268.5 pence per Existing Ordinary Share on 22 September 2009, being the last practicable date prior to the announcement of the Placing and the Rights Issue.

Subject to, amongst other things, the conditions described below, the offer of New Ordinary Shares under the Rights Issue will be made on the following basis:

1.3 New Ordinary Shares at 100 pence each for every 1 Ordinary Share held

by Qualifying Shareholders on the Record Date and so in proportion to any other number of Ordinary Shares each Qualifying Shareholder then holds.

Entitlements to New Ordinary Shares under the Rights Issue will be rounded down to the nearest whole number and fractions of New Ordinary Shares will not be allotted to Qualifying Shareholders. Such fractions will be aggregated and, if possible, placed in the market. The net proceeds of such placing will be paid to the Company.

The Rights Issue will result in 545,525,090 New Ordinary Shares being issued, representing approximately 56.5% of the enlarged issued share capital of the Company immediately following the completion of the Placing and the Rights Issue (assuming that no further Ordinary Shares are issued as a result of the exercise of any options under the Barratt Share Schemes in the period from publication of the Prospectus to completion of the Placing and the Rights Issue).

The Rights Issue is fully underwritten by the Underwriters on the terms and conditions of the Underwriting Agreement.

The Rights Issue is conditional, amongst other things, on:

the passing (without material amendment) of the Resolution;
each condition to enable the Nil Paid Rights and the Fully Paid Rights to be admitted as participating securities in CREST (other than Admission of the New Ordinary Shares (nil paid) being satisfied on or before the date of the General Meeting;
Placing Admission and Admission of the New Ordinary Shares (nil paid) occurring not later than 9.00 a.m. on 20 October 2009 (or such later time and date as the Joint Sponsors may agree with the Company); and
the Underwriting Agreement having become unconditional in all respects save for the conditions relating to Placing Admission and Admission of the New Ordinary Shares (nil paid) and CREST enablement and not having been terminated by the time at which the Resolution is passed.

An application will be made to the UK Listing Authority for the New Ordinary Shares (nil and fully paid) to be admitted to the Official List and an application will be made to the London Stock Exchange for the New Ordinary Shares (nil and fully paid) to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective and that dealings in the New Ordinary Shares, nil paid, will commence at 8.00 a.m. on 20 October 2009. It is expected that dealings in the New Ordinary Shares, fully paid, will commence at 8.00 a.m. on 4 November 2009.

The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares.

Further detail on the structure of the Placing and the Rights Issue

The Placing and the Rights Issue have been structured in a way that is expected to have the effect of realising distributable reserves approximately equal to the proceeds of the Placing and the Rights Issue less the nominal value of the Placing Shares and the New Ordinary Shares issued by the Company. The Company and the Newco Subscriber have agreed to subscribe for ordinary shares in Newco1 and Newco2. The Newco Subscriber will apply (i) the monies received from the Placees pursuant to the Placing to subscribe for redeemable preference shares in Newco1, and (ii) the subscription amount received from Qualifying Shareholders and renouncees and from acquirers of New Ordinary Shares not taken up by Qualifying Shareholders or renouncees under the Rights Issue (less any premium above the Rights Issue Price) to subscribe for redeemable preference shares in Newco2.

The Company will allot and issue the Placing Shares to the Placees in consideration of the Newco Subscriber transferring its holdings of ordinary shares and redeemable preference shares in Newco1 to the Company. The Company will allot and issue the New Ordinary Shares to those persons entitled thereto in consideration of the Newco Subscriber transferring its holdings of ordinary shares and redeemable preference shares in Newco2 to the Company. Accordingly, instead of receiving cash consideration for the issue of the Placing Shares and the New Ordinary Shares, the Company will own the entire issued share capital of Newco1 and Newco2 whose respective only asset will be their cash reserves which will represent an amount equal to the proceeds of the Placing (in the case of Newco1) and the Rights Issue (in the case of Newco2). The Company should be able to access these funds by redeeming the redeemable preference shares it holds in Newco1 and/or Newco2 or, alternatively, during any interim period prior to redemption, by procuring that Newco1 and/or Newco2 lend(s) the amount to the Company.

General Meeting

The General Meeting will be held at 9.00 a.m. on 19 October 2009 at UBS, 1 Finsbury Avenue, London EC2M 2PP. The purpose of the General Meeting is to consider and, if thought fit, pass the Resolution required to authorise the Company to carry out the Placing and the Rights Issue.

Shareholders should read the full text of the Resolution contained in the notice of General Meeting in the Circular.

Appendix I - Summary expected timetable of principal events

Event 2009

Announcement of the Placing and the Rights Issue and expected publication of the Prospectus and despatch of the circular	23 September
General Meeting	9.00 a.m. on 19 October
Issue and allotment of the Placing Shares	19 October
Record Date for entitlement under the Rights Issue	close of business on 19 October
Provisional Allotment Letters despatched to Qualifying Non CREST Shareholders only17	19 October
Placing Admission and dealings in Placing Shares, fully paid, commence on the London Stock Exchange	8.00 a.m. on 20 October
Admission and dealings in New Ordinary Shares, nil paid, commence on the London Stock Exchange, and Ordinary Shares marked 'ex rights'	8.00 a.m. on 20 October
Nil Paid Rights credited to stock accounts in CREST	as soon as possible after 8.00 a.m. on 20 October
Nil Paid Rights and Fully Paid Rights enabled in CREST	as soon as possible after 8.00 a.m. on 20 October
Latest time and date for acceptance, payment in full and registration of renunciation of Provisional Allotment Letters	11.00 a.m. on 3 November
Admission and dealings in New Ordinary Shares, fully paid, commence on the London Stock Exchange	by 8.00 a.m. on 4 November

All capitalised terms, unless otherwise defined herein, are defined in the Appendix to this announcement. Unless otherwise stated, references to time contained in this announcement are to London time.

Appendix II - Definitions

In this announcement, the following expressions have the following meaning unless the context requires otherwise:

'£'	the lawful currency of the United Kingdom;
'2010 financial year'	the Group's finanical year ended 30 June 2010;
'2009 financial year'	the Group's financial year ended 30 June 2009;
'2008 financial year'	the Group's financial year ended 30 June 2008;
'2007 financial year'	the Group's financial year ended 30 June 2007;
'Adjusted Operating Margin'	means applicable adjusted operating profit (being profit from operations before finance costs and finance income, share of posttax profit/loss of joint ventures, tax and exceptional items) expressed as a percentage of applicable revenue;
'Admission'	the admission to listing on the Official List of the New Ordinary Shares (nil paid or fully paid, as the case may require) becoming effective and the admission of such shares (nil paid or fully paid, as the case may require) to trading on the London Stock Exchange's main market for listed securities (in accordance with the Standards) becoming effective;
'Barclays Capital'	the investment banking division of Barclays Bank PLC
'Barratt' or 'the Company'	Barratt Developments PLC, a company incorporated in England and Wales with registered number 00604574, whose registered office is at Barratt House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville, Leicestershire, LE67 1UF;
'Barratt Group' or the 'Group'	the Company together with its subsidiaries and subsidiary undertakings;
'Barratt Share Schemes'	the share based incentive schemes and plans of the Group (being the Barratt Developments Long-Term Performance Plan, the Barratt Developments Managers Long-Term Performance Plan, the Barratt Developments Co-Investment Plan, the Barratt Developments 1997 Executive Share Option Plan, the Barratt Developments Employee Share Option Plan, the Barratt Developments 2008 Executive Share Option Scheme, the Barratt Developments Savings-Related Share Option Scheme, the Barratt Developments Management Incentive Plan 2008-2011, the Barratt Developments Senior Management Share Option Plan 2009/1010 and the Barratt Developments Employee Benefit Trust;
'Board'	the board of directors of the Company from time to time;
'Business Day'	any day on which banks are generally open in London for the transaction of business other than a Saturday or Sunday or public holiday;
'certificated' or 'in certificated form'	a share or other security which is not in uncertificated form (that is, not in CREST);
'Circular'	the circular to Shareholders to be published on or around 23 September 2009 in connection with the Placing and the Rights Issue and including the notice convening the General Meeting;
'Companies Act 2006'	the Companies Act of England and Wales 2006, as amended;
'Credit Suisse'	Credit Suisse Securities (Europe) Limited of One Cabot Square, London E14 4QJ;
'CREST'	the system for the paperless settlement of trades in securities and the holding of uncertificated securities in accordance with the CREST Regulations operated by Euroclear UK;
'CREST Manual'	the rules governing the operation of CREST, consisting of the CREST Reference Manual, CREST International Manual, CREST Central Counterparty Service Manual, CREST Rules, Registrars Service Standards, Settlement Discipline Rules, CCSS Operations Manual, Daily Timetable, CREST Application Procedure and CREST Glossary of Terms (all as defined in the CREST Glossary of Terms promulgated by Euroclear UK on 15 July 1996, as amended);
'CREST member'	a person who has been admitted by Euroclear UK as a systemmember (as defined in the CREST Regulations);
'CREST Regulations'	the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended from time to time;
'CREST sponsor'	a CREST participant admitted to CREST as a CREST sponsor;
'CREST sponsored member'	a CREST member admitted to CREST as a sponsored member;
'Daily Official List'	the daily official list of the London Stock Exchange;
'Directors'	the directors of the Company;
'Disclosure Rules and Transparency Rules'	the disclosure rules and transparency rules made under Part VI of FSMA (as set out in the FSA Handbook), as amended;
'Euroclear UK'	Euroclear UK & Ireland Limited (formerly named CRESTCo Limited), the operator of CREST;
'Excluded Shareholders'	subject to certain exceptions, Shareholders who have an address in the United States, Canada or any Excluded Territory on Barratt's register of members;
'Excluded Territories'	New Zealand, South Africa and Japan and any other jurisdiction where the extension or availability of the Rights Issue (and any other transaction contemplated thereby) would breach any applicable law;
'Existing Ordinary Shares'	the Ordinary Shares in issue as at the date of this document
'Ex-Rights Date'	20 October 2009
'Form of Proxy'	the form of proxy accompanying the Circular for use in connection with the General Meeting;
'FSA' or 'Financial Services Authority'	the Financial Services Authority of the United Kingdom;
'FSMA'	the Financial Services and Markets Act 2000, as amended;
'Fully Paid Rights'	rights to acquire New Ordinary Shares, fully paid;
'General Meeting'	the general meeting of the Company to be convened pursuant to the notice set out on in the Circular
'HMRC'	HM Revenue and Customs;
'Joint Sponsors'	Credit Suisse and UBS;
'Listing Rules'	the listing rules made under Part VI of FSMA (as set out in the FSA Handbook), as amended;
'London Stock Exchange'	London Stock Exchange plc or its successor(s);
'Newco1'	Barratt Capital (Jersey 1) Limited;
'Newco2'	Barratt Capital (Jersey 2) Limited;
'Newco Subscriber'	Credit Suisse Securities (Europe) Limited of One Cabot Square, London E14 4QJ;
'New Ordinary Shares'	the ordinary shares of 10 pence each in the capital of the Company to be issued by the Company pursuant to the Rights Issue;
'NHBC'	the National House-Building Council;
'Nil Paid Rights'	rights to acquire New Ordinary Shares, nil paid;
'Official List'	the official list of the UK Listing Authority;
'Ordinary Shares'	the ordinary shares of 10 pence each in the capital of the Company;
'Overseas Shareholder'	holders of Ordinary Shares with registered addresses outside the UK or who are citizens of, incorporated in, registered in or otherwise resident in, countries outside the UK;
'Placees'	those persons with whom Placing Shares are to be placed;
'Placing'	the placing of Placing Shares as described in this document;
'Placing Admission'	the admission of the Placing Shares to listing on the Official List and to trading on the main market for listed securities of the London Stock Exchange;
'Placing Agents'	Credit Suisse and UBS;
'Placing Price'	240 pence per Placing Share;
'Placing Shares'	the 72,916,666 Ordinary Shares to be issued by the Company pursuant to the Placing;
'Prospectus'	the prospectus to be published on or around 23 September 2009 relating to the Company for the purpose of the Placing and the Rights Issue (together with any supplements or amendments thereto);
'Prospectus Rules'	the prospectus rules made under Part VI of FSMA (as set out in the FSA Handbook), as amended;
'Provisional Allotment Letter'	the provisional allotment letter to be issued in connection with the Rights Issue;
'Qualifying CREST Shareholder'	Qualifying Shareholders holding Ordinary Shares in uncertificated form;
'Qualifying Non-CREST Shareholders'	Qualifying Shareholders holding Ordinary Shares in certificated form;
'Qualifying Shareholders'	holders of Ordinary Shares on the register of members of the Company on the Record Date;
'Record Date'	the close of business in London on 19 October 2009;
'Registrar'	Capita Registrars of Northern House, Woodsome Park, Fenay Bridge, Huddersfield, HD8 0GA;
'Resolution'	the special resolution to be proposed at the General Meeting as set out in the notice of General Meeting in the Circular;
'Rights Issue'	the offer by way of rights to Qualifying Shareholders to acquire New Ordinary Shares, on the terms and conditions set out in the Prospectus and, in the case of Qualifying Non-CREST Shareholders only, the Provisional Allotment Letter;
'Rights Issue Price'	100 pence per New Ordinary Share;
'Shareholder(s)'	holder(s) of Ordinary Shares from time to time;
'stock account'	an account within a member account in CREST to which a holding of a particular share or other security in CREST is credited;
'Standards'	the current edition of the Admission and Disclosure Standards produced by the London Stock Exchange;
'subsidiary'	a subsidiary as that term is defined in section 1162 of the Companies Act 2006;
'subsidiary undertaking'	a subsidiary undertaking as that term is defined in section 1159 of the Companies Act 2006;
'UBS Limited' or 'UBS'	UBS Limited of 1 Finsbury Avenue, London EC2M 2PP;
'UK Listing Authority'	the Financial Services Authority acting in its capacity as the competent authority for the purposes of FSMA;
'uncertificated' or 'in uncertificated form'	a share or other security recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST;
'Underwriters'	the Placing Agents and Barclays Bank PLC, HSBC Bank Plc, Lloyds TSB Bank PLC, and RBS Hoare Govett Limited;
'Underwriting Agreement'	the conditional underwriting agreement dated 23 September 2009 between the Company and the Underwriters relating to the Placing and the Rights Issue
'United Kingdom' or 'UK'	the United Kingdom of Great Britain and Northern Ireland;
'United States'	the United States of America, its territories and possessions, any state of the United States and the District of Columbia;
'US Dollars'	the lawful currency of the United States;
'US Securities Act'	the US Securities Act of 1933, as amended;
'VAT'	value added tax;
'WB Acquisition'	the acquisition of the entire issued share capital of Wilson Bowden by Barratt Developments PLC, by means of a scheme of arrangement which became effective on 26 April 2007;
'WB Acquisition Facilities'	the committed £484.1 million term five year term facility and the committed £750.0 million revolving credit facility (which now operates as a term facility) which are both made available under a credit agreement dated 5 February 2007 (as amended and restated from time to time) between, among others, Barratt and Lloyds TSB Bank PLC (as facility agent); and
'Wilson Bowden'	Wilson Bowden Limited (formerly Wilson Bowden plc until 26 April 2007) a company incorporated in England and Wales with registered number 02059194, whose registered office is at Barratt House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville, Leicestershire, LE67 1UF.

IMPORTANT NOTICE

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT. NOTHING IN THIS ANNOUNCEMENT SHOULD BE INTERPRETED AS A TERM OR CONDITION OF THE PLACING OR THE RIGHTS ISSUE. ANY DECISION TO PURCHASE, OTHERWISE ACQUIRE, SUBSCRIBE FOR, SELL OR OTHERWISE DISPOSE OF ANY PLACING SHARES, NIL PAID RIGHTS, FULLY PAID RIGHTS, AND/OR NEW ORDINARY SHARES MUST BE MADE ONLY ON THE BASIS OF THE INFORMATION CONTAINED IN AND INCORPORATED BY REFERENCE INTO THE PROSPECTUS. THE PROSPECTUS AND ANY SUPPLEMENT OR AMENDMENT THERETO WILL GIVE FURTHER DETAILS OF THE PLACING SHARES, THE NIL PAID RIGHTS, THE FULLY PAID RIGHTS AND THE NEW ORDINARY SHARES. COPIES OF THE PROSPECTUS, WHEN PUBLISHED, WILL BE MADE AVAILABLE FROM BARRATT'S REGISTERED OFFICE AND ON THE COMPANY'S WEBSITE AT WWW.BARRATTDEVELOPMENTS.CO.UK/IR/EQUITYRAISE/ PROVIDED THAT THE PROSPECTUS WILL NOT BE AVAILABLE (WHETHER THROUGH THE WEBSITE OR OTHERWISE), SUBJECT TO CERTAIN EXCEPTIONS, TO SHAREHOLDERS IN THE UNITED STATES, CANADA AND SHAREHOLDERS IN EXCLUDED TERRITORIES. THE PROSPECTUS WILL ALSO BE AVAILABLE FOR INSPECTION AT THE UK LISTING AUTHORITY'S DOCUMENT VIEWING FACILITY.

The distribution of this announcement, the Prospectus and/or the Provisional Allotment Letters and/or the transfer or offering of Nil Paid Rights, Fully Paid Rights or New Ordinary Shares into jurisdictions other than the United Kingdom is or may be restricted by law. Persons into whose possession this announcement or any such document comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement and the information contained in it is not for distribution (directly or indirectly) in or to the United States, Canada, Japan, New Zealand or South Africa. It does not constitute an offer for sale of securities, nor a solicitation to purchase or subscribe for securities, in any jurisdiction.

None of the Placing Shares, the Nil Paid Rights, the Fully Paid Rights, the Provisional Allotment Letters or the New Ordinary Shares have been, and will not be, registered under the United States Securities Act of 1933, as amended (the 'Securities Act'), and may not be offered or sold in the United States absent registration or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Company does not intend to register any part of the Placing or the Rights Issue in the United States or to conduct a public offering of securities in the United States. No money, securities or other consideration is being solicited and, if sent in response to the information contained herein, will not be accepted.

Credit Suisse Securities (Europe) Limited, Barclays Bank PLC, HSBC Bank Plc, Lloyds TSB Bank PLC and RBS Hoare Govett Limited, which are authorised and regulated in the United Kingdom by the FSA, are acting for the Company and no one else in connection with the Placing and the Rights Issue and will not regard any other person (whether or not a recipient of this document) as a client in relation to the Placing or the Rights Issue and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing or the Rights Issue or any matters referred to in this announcement.

UBS Limited is acting exclusively for the Company and no one else in connection with the Placing and the Rights Issue and will not regard any other person (whether or not a recipient of this document) as a client in relation to the Placing or the Rights Issue and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing and the Rights Issue or any matters referred to in this announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed on the Joint Sponsors, Joint Bookrunners and the Co-Lead Managers by FSMA or under US securities laws or other law, the Joint Sponsors, Joint Bookrunners and the Co-Lead Managers accept no responsibility whatsoever for, nor make any representation or warranty, express or implied, in relation to, the contents of this document, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with Barratt Developments PLC, the Placing Shares, the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares, the Provisional Allotment Letters, the Placing or the Rights Issue. The Joint Sponsors, Joint Bookrunners and the Co-Lead Managers accordingly disclaim all and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this document or any such statement.

Credit Suisse Securities (Europe) Limited, UBS Limited, Barclays Bank PLC, HSBC Bank Plc, Lloyds TSB Bank PLC and RBS Hoare Govett Limited as underwriters of the Rights Issue may, in accordance with applicable legal and regulatory provisions and subject to the Underwriting Agreement, engage in transactions in relation to the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares, and/or related instruments for their own account for the purpose of hedging their underwriting exposure or otherwise. Except as required by applicable law or regulation, Credit Suisse Securities (Europe) Limited, UBS Limited, Barclays Bank PLC, HSBC Bank Plc, Lloyds TSB Bank PLC and RBS Hoare Govett Limited do not propose to make any public disclosure in relation to such transactions.

This announcement is for information purposes only and does not constitute or form part of any offer or invitation to purchase, otherwise acquire or subscribe for, sell or otherwise dispose of or issue, or any solicitation of any offer to purchase, otherwise acquire or subscribe for, sell or otherwise dispose of or issue Placing Shares, Nil Paid Rights, Fully Paid Rights or New Ordinary Shares or to take up any entitlements to Nil Paid Rights in any jurisdiction.

Statements included in this announcement, which are not historical facts (including any statements concerning plans and objectives of management for future operations or economic performance, or assumptions related thereto), are 'forward-looking statements' within the meaning of the United States federal securities laws. Forward-looking statements can be identified by words such as 'believes', 'estimates', 'anticipates', 'expects', 'intends', 'may', 'will', 'plans' and other words of similar meaning in connection with a discussion of future operating or financial performance. These may include, among others, statements relating to:

the Group's plans or objectives for future operations, products or financial performance;
the impact of the current downturn in the UK's housebuilding sector on the Group's operating and financial performance and financial condition;
the prospects for the UK housing market;
the impact of an economic downturn or growth in particular regions;
anticipated uses of cash; and
the expected outcome of contingencies, including litigation and pension liabilities.

The forward-looking statements in this announcement are made based upon the Company's expectations and beliefs concerning future events impacting the Group and therefore involve a number of known and unknown risks and uncertainties. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which it will operate, which may prove not to be accurate. The Company cautions that these forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in these forward-looking statements.

Important factors that could cause the actual results of operations or the financial condition of the Group to differ materially from those expressed or implied by forward-looking statements in this announcement include, but are not limited to, the factors indicated in this announcement under 'Background to the Placing and the Rights Issue' and 'Barratt's actions during the downturn' and include:

the impact of the general economic downturn on the Group's business;
continued or increased decline in the UK housebuilding industry, house prices and sales volumes;
changes in consumer confidence;
continued or increased disruption in the availability of mortgage financing and increases in the cost of mortgage financing;
the Rights Issue and the Placing not completing;
levels of indebtedness and restrictions on the Group's operations imposed by the terms of its existing or amended financing arrangements, as applicable and potential inability to comply with covenants in such financing arrangements, in the case of the amended financing arrangements, in the longer term;
the cost of and ability to access capital in the longer term;
general competitive pressures;
provisions and asset impairment charges or write-downs;
the availability and cost of suitable land and shortages of, or increased prices for, labour and materials used in home production;
changes or differences in government policy towards the housebuilding sector in the UK;
changes in the housebuilding industry; and
the impact of existing and future legislation.

Undue reliance should not be placed on forward-looking statements.

Any forward-looking statements contained in this announcement speak only as at the date hereof. Except as required by the Listing Rules, the Disclosure Rules and Transparency Rules, the Prospectus Rules, the London Stock Exchange or other applicable law or regulation, the Company undertakes no obligation to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

You are advised to read the Circular and the Prospectus including the information incorporated by reference in the Prospectus, in their entirety for a further discussion of the factors that could affect the Company's future performance and the industry in which it operates. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur.

Prices and values of, and income from, securities may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. Persons needing advice should consult an independent financial adviser. Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

This announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom.

1 Source: 'GDP Growth: Economy contracts by 0.7% in Q2 2009', Office for National Statistics

2 Source/basis: Total number of loans approved for house purchase, remortgaging and other secured lending, 'Monthly Statistics Release', British Bankers' Association, 25 August 2009

3 Source: '2008: a difficult year for the housing market', Nationwide Housing Research

4 Source: 'Halifax House Price Index 2008', Halifax and Bank of Scotland Research, 10 September 2009

5 Source: 'UK Monthly Indices (Post '91)', Nationwide Housing Research

6 Source: 'Historical House Price Data', Halifax and Bank of Scotland Research, September 2009

7 Source: 'Historical House Price Data', Halifax and Bank of Scotland Research, September 2009

8 Source: 'UK Monthly Indices (Post '91)', Nationwide Housing Research

9 Source: 'UK Monthly Indices (Post '91)', Nationwide Housing Research

10 Source: RICS housing market surveys, July and August 2009

11 Source: RICS housing market survey, July 2009

12 Source: '2008 Home Start Lowest on Record', NHBC, 23 January 2009

13 Unaudited and restated

14 Unaudited and restated

15 Source: 'Homes for the Future: more affordable, more sustainable', Department of Communities and Local Government, Green Paper, 2007

16 Source: 'Housing Starts as Low as 80,000', NHBC, 25 February 2009

17 Subject to certain restrictions relating to Overseas Shareholders.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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