Taylor Wimpey, the troubled housebuilder, said this morning that it is still in discussions about changing the terms of its debt.

However, hopes that the negotiations with lending banks and private placement holders could be concluded in the next few weeks have been dashed as the housebuilder has extended talks to include Eurobond holders.

In a statement, the company said the renegotiation of covenants on its £1.7 billion debt would now take longer and that a settlement was unlikely before the new year.

The company, whose share price has fallen by 83 per cent since the start of 2008, said in August that it would breach the financial covenants on its £1.7 billion debt by February if they were not renegotiated.

Taylor Wimpey said that its coordinating banks have indicated they will replace the current covenants with a revised set which are more appropriate to the current market environment.

The company said: “The recent unprecedented events in world financial markets have reinforced the Board's cautious view of the short term outlook for UK housing. In the current environment, securing a comprehensive financing structure that is robust under all reasonable downside scenarios is essential.”

The worsening of the financial crisis has exacerbated Taylor Wimpey's negotiations and is likely to have increased the cost of servicing its debts.

The cost of debt servicing has soared for other British housebuilders that have renegotiated their debt in recent weeks, even though they were completed before the last two weeks in which the financial crisis has deepened. Interest levels for both Barratt Developments and Redrow increased about 2 percentage points.

Taylor Wimpey, which was formed from the merger of George Wimpey and Taylor Woodrow last year, has struggled in difficult market conditions for housebuilders as house prices fall in the UK.

Times Recommends

• US jobs plunge in worst fall since 1974
• Brown will press banks to pass on full rate cut
• Woolworths axes 450 staff amid firesale