Countrywide shares plunge after £140m fund raising
THE boss of crisis-hit estate agency Countrywide has insisted its “back to basics” turnaround strategy is on track after news it would raise £140m through a heavily discounted share sale knocked more than 60pc off its value.
Peter Long, executive chairman, said he was “delighted” that investors, some new and some current, were willing to put up the cash for new shares that will be sold at 10p each – an 88pc discount to Wednesday’s closing price of 80p.
He said: “The capital structure now is off the table, it is done. When you want to raise £125m and were able to raise £140m, that says not only were shareholders supportive, they were over-supportive beyond what we needed to raise.”
The placing will generate proceeds of £129m after fees and will be used to pay off 60pc of Countrywide’s £200m debt pile.
It will need to be approved by a majority of shareholders at a vote later this month but the company’s biggest backer, Oaktree Capital, which has a 30pc stake, has already agreed to vote in favour.
Having already fallen 90pc over the past two years, the company’s shares plunged another 31.37p, or 62.8pc, to 18.58p yesterday.
The plan was unveiled alongside Countrywide’s half-year results, which revealed it fell to a £242m loss as it was forced to write down the value of assets including brand names, customer contracts and computer software by £211m. Revenues at the company, which owns the Bairstow Eves and Hamptons International chains, fell 8.5pc to £299m.
Countrywide has been struggling with a slower housing market and tough competition from online competitors such as Purplebricks.
Mr Long, who took over executive responsibilities when former chief executive Alison Platt was ousted in January, will now step back from the day-to-day running of the business as operations boss Paul Creffield is promoted to managing director.
Mr Long said Mr Creffield’s efforts to turn the business around would help it return to strong levels of profits not seen since 2015 within three years.