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Countrywide investors back £140 million emergency fund raise

It means that Countrywide will be able to stay afloat and pay down part of its £200 million debt.


Countrywide is in trouble (PA)

Countrywide is in trouble (PA)

Countrywide is in trouble (PA)

Shareholders in Countrywide have voted through an emergency £140 million fundraising plan that aims to put the struggling estate agent on a securer financial footing.

The group, which is behind the Bairstow Eves and Hamptons brands, saw over 98% of investors back the cash call at its annual meeting.

It means that Countrywide will be able to stay afloat and pay down part of its £200 million debt mountain.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Countrywide is back from the brink thanks to a shareholder bailout, though the estate agent is still fighting an uphill battle on a rather slippery slope.

“The injection of £129 million of cash will keep the wheels turning for now, but that money is being used to pay down debt rather than to fund growth. In other words, this cash is a lifeline rather than a springboard.”

Around £115 million of the share issue will be used to pay down debt and £14 million for general corporate purposes and to support working capital.

The remaining £11 million will be spent on fees and expenses.

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Shares in Countrywide crashed over 64% earlier this month when it announced the fundraising bid.

The announcement came as the company reported dismal results for the first half, having swung to a half year pre-tax loss of £242.8 million, compared with a profit of £192,000 a year earlier.

Countrywide shares were down nearly 10% on Tuesday afternoon.

The estate agent recently shelved plans that could have seen top bosses pocket millions following shareholder consternation at the proposed payouts.

The group had planned to pay out as much as £20 million to a trio of executives as part of changes to its remuneration policy.

However, Countrywide then backtracked and said it would stick with existing pay plans after it met with top investors.

“The company’s share price has fallen by around 90% over the last year, so it’s no surprise plans to reward executives in the event of a big bounce back have been given short shrift by shareholders, and withdrawn from the AGM agenda.

“Indeed some of the wounds Countrywide is nursing were self-inflicted, though political and fiscal decisions have played a part too. In particular stamp duty reforms and Brexit concerns prompted a 22% decline in London housing transactions last year, which compounded the operational mistakes made by Countrywide itself,” Mr Khalaf added.