THE housebuilder Taylor Wimpey is in the advanced stages of an emergency £400m fund-raising to save it from collapse.

A deal could be in place by Wednesday to accompany a gloomy trading statement. Chairman Norman Askew and Peter Redfern, chief executive, are also close to securing a deal with its banks to relax lending covenants on bank debt of £1.9 billion.

The dramatic rescue is being coordinated by UBS, the investment bank, and JP Morgan Cazenove. The builder’s biggest investors, which include Alliance Bernstein, Toscafund Asset Management, Standard Life, Barclays, Legal & General and M&G, have been approached to support a placing that could total at least £400m.

Between them these investors account for 25% of the company. They are broadly supportive of the proposal, but have still not agreed on the price.

In addition to the existing investors, UBS has approached several high-profile hedge funds, including Och Ziff, to inject funds into the builder. The plan is for the placing to be underwritten and to give other, smaller investors an opportunity to take part.

Taylor Wimpey, which was formed out of the merger of Taylor Woodrow and Wimpey a year ago, is one of Britain’s biggest housebuilders. It also has sizeable operations in America, where it is building houses in Florida, San Francisco and Texas. In Europe the group has divisions in Spain and Gibraltar.

It has been badly hit by the credit crisis, though, which has made it difficult to sell new homes and has put pressure on prices. In addition the company, which last year built 14,862 homes in the UK, is committed to spending £453m this year on completing land purchases that have already been agreed.

The group is sitting on a valuable land bank but, like a number of its indebted sector peers, it needs an injection of capital to see it through these challenging times.

One analyst said: “No-one wants to give away these land banks on the cheap. The problem is one of liquidity and this is what the group is trying to address.”

Other builders are also in trouble. Among them are Crest Nicholson and McCarthy & Stone, two companies that were both taken private in consortiums led by HBOS. In most cases, banks are being supportive, and within the next three weeks Barratt, which is now chaired by Bob Lawson, should confirm that its banks have agreed to relax covenants on debt totalling £1.7 billion.

The City is keen to hear the details of Taylor Wimpey’s trading statement and whether it will give an insight into additional writedowns on the land bank’s value. It is likely the statement will include a profit warning.

Last year Taylor Wimpey wrote off £283m against its North American business. According to its last set of report and accounts, the company has net assets of £3.7 billion, equivalent to a share price of 352p per share. This compares with Friday’s share price of 62p, which values the builder at £654m.

Redfern is also expected to say that the dividend will be cut back dramatically. Taylor Wimpey’s pension trustees are understood to be taking advice from lawyers. The builder’s scheme has a deficit of £216m at present.

The group has already moved to address its cost base and recently announced it will close 13 of its 39 UK offices, which could cost up to 600 jobs. It has also asked suppliers to reduce their bills.

Last month, Redrow, one of Taylor Wimpey’s UK competitors, warned that sales and margins on its homes were coming under increasing pressure.

It is not only housebuilders that are being affected by falling property prices. So, too, are building-materials groups. Wolseley, which is due to make a report to investors within the next fortnight, is one of the worst hit. It is trying to sell peripheral businesses to reduce debts, but a number of analysts believe it will breach its covenants and have to raise additional funds.

On Friday, shares in Taylor Wimpey jumped by 12% on hopes that a rescue capital injection was imminent. The group was hoping to delay an announcement until Wednesday, but it is expected that the London Stock Exchange will require the company to give an explanation of its plans when the market opens tomorrow.

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