Countrywide secures £90m lifeline after striking deal with Alchemy, shares slide
Countrywide has secured a £90m lifeline, the estate agent and property services firm confirmed on Thursday, as it looks to cut debt and shore up its balance sheet.
Countrywide
394.80p
16:35 05/03/21
Real Estate Investment & Services
2,159.59
11:39 25/04/24
Private equity firm Alchemy Partners will invest up to £90m through a fully underwritten equity placing. The deal will give Alchemy effective control of Countrywide, with a stake of between 50.1% and 67.7%.
Along with a new four-year loan agreed with lenders, the recapitalisation will help cut Countrywide’s debt pile by around £50m. As at 30 June 2020, underlying net debt, after adjusting for HMRC deferrals, was £91.9m.
Executive chairman Peter Long will now leave the company, with Carl Leaver named chair. A new chief executive is expected to be announced in the fourth quarter, allowing group managing direct Paul Creffield to retire next year.
Urging shareholders to back the deal, Countrywide said: “The group is at a critical inflection point and is in urgent need of a recapitalisation to reduce its net debt and lessen its exposure to lenders.
“The group remains burdened by excessive debt.”
The delivery of its long-term strategy was also reliant on “significant capital investment”, it argued, while the weak macro-economic outlook demanded a “resilient” balance sheet.
Long said: “When I stepped in as executive chairman, the objectives were very clear: to restore profitability and fix the balance sheet. The business returned to profitable growth in 2019 and with this proposed £90m fund raise, Countrywide now has a sustainable capital structure that will allow it to thrive.”
The update came as Countrywide – which owns the Hamptons, Gascoigne-Pees and Bairstow Eves brands, among others – revealed group income in the six months to 30 June had fallen 28% to £173.8m, after lockdown closed its branches from 23 March.
Branches did not start to re-open in England until 18 May, and until June in Wales and Scotland.
Adjusted earnings before interest, tax, deductibles and amortisation fell 23% to £14.86m, while the loss from continuing operations widened 10% to £40.15m.
The group loss widened to £44.34m from £38.41m a year previously.
Since lockdown measures were eased, the UK property market has enjoyed a mini boom, fuelled by pent-up demand and the stamp duty holiday.
Countrywide said current trading was “buoyant, with positive performance indicators across the group”.
But it added: “It is still too early to assess the long-term impact of Covid-19 on the economy, and specifically housing transactions, and as a result the group is unable to provide guidance for the full year ending 31 December 2020.”
Shares in the firm were off 10% at 166.2p by 1400 BST.