UPDATE 3-Redrow shares up on new debt facility; profit halves

(Adds share price, analyst comment)

By Simon Meads

LONDON, Sept 9 (Reuters) - British housebuilder Redrow Plc (RDW.L) said it had secured a new 450 million pound ($803 million) debt facility to 2011, sending its shares up more than 9 percent.

The company also announced a near halving in annual profit and said it would not pay a final dividend in order to preserve cash following the sharp decline in the housing market, which it expects to remain tough for the foreseeable future.

Redrow said in its results statement on Tuesday that it had agreed a new covenant package appropriate to the current trading environment.

Chief Executive Neil Fitzsimmons told Reuters the effective interest rate on its debt was around 6.5 percent last year, but was probably "going to move up a couple of percent for 2008-09".

Pretax profit before exceptional items was 65.5 million pounds in the year to end-June, down from 121.1 million the year before, on revenues down 22 percent to 650 million pounds.

Redrow said it had reviewed the value of its land and work under progress, resulting in a 259.4 million pound exceptional charge.

In a note to investors, Hargreaves Landsdown analyst Keith Bowman said Redrow had counterbalanced the negative news of landbank writedowns with the good news regarding the negotiation of new banking facilities.

Redrow shares stood 9.1 percent higher at 207 pence at 1030 GMT.

Bowman said the landbank writedown highlights question marks over rival housebuilders and their valuation policies and added: "On the downside, all of the key financial metrics continue to deteriorate, with no obvious catalyst for an imminent recovery of the UK housing market."

The results follow a survey from the Royal Institution of Chartered Surveyors (RICS) that said UK house prices kept declining sharply in the three months to August, with home sales per surveyor hitting a new low.

RICS said completed sales were just 12.7 per surveyor, the lowest since the question was first included in the survey in 1978.

LENDING SQUEEZE

Fitzsimmons said he foresees the difficult conditions in the market persisting for some time, adding that issues regarding mortgage liquidity could last through to 2010.

Redrow said net reservations in the current financial year have continued at similar levels to the previous quarter, with 1,050 sales made for completion in 2008-09.

Fitzsimmons said the group was having to work hard to secure reservations given the levels of home-buyer confidence and mortgage availability and said "it is really difficult to call if things are going to get worse or get better".

Fitzsimmons welcomed the government's introduction of a stamp duty holiday on house purchases up to 175,000 pounds and a shared equity scheme to help first-time buyers.

"Are they going to be transforming for how the housing market is behaving?" he asked. "I doubt it very much. I do feel the real issues surround mortgage liquidity and home-buyer confidence and those are the issues that really need to be addressed."

Fitzsimmons called for a package of measures that would improve liquidity by supporting securitisation of housebuilders' assets and tax breaks to help young people to save for a deposit.

"I think there is a lot of hard thinking to be done about where interest rate policy now sits but I increasingly think the risks to the economy are on the downside rather than on the upside," he added. (Editing by Quentin Bryar/Simon Jessop)