Countrywide shares dive more than 60% as estate agent bids to stay afloat
The struggling company is hoping to raise £140m.
Countrywide shares plunged more than 60% as the beleaguered estate agent said it was tapping investors for extra cash in the hope of servicing its debts and staying afloat.
The company said it would hold a shareholder vote later this month over plans to raise around £140 million in gross proceeds through a share placing and open offer.
It said the funds from the capital refinancing plan would be used to reduce its net debt by around 60%.
But an auditor’s note in Countrywide’s half-year results highlighted a “material uncertainty” surrounding the completion of the placing which “may cast significant doubt about the group’s ability to continue as a going concern”.
“The effect on the group of any failure to implement the capital refinancing plan may also be compounded by factors outside of the group’s control, such as a further downturn in the UK housing market or conditions adversely impacting the UK mortgage market,” it warned.
Shares in Countrywide were down as much as 64% in morning trading.
The announcement came as the company reported dismal results for the first half, having swung to a pre-tax loss of £242.8 million over the six months to June 30 compared with a profit of £192,000 a year earlier.
Group income slid 9% to £303.6 million.
Countrywide tried to reassure investors that the group’s results would “benefit from an improved sales pipeline in H2 2018, a traditionally stronger performance in the second half of the year due to seasonality, as well as cost efficiencies that it aims to achieve in the Financial Services and B2B businesses”.
Countrywide said it expects that revenue from complimentary services will increase by year-end and that it plans to increase revenue from those services as part of its sales strategy.
The company added that it has made “significant progress” in building up its industry expertise and staffing levels in its sales, lettings and financial services businesses, though headcount across its central operations was slashed by a third.
It added that the register of properties was up 3% on the year as at the end of June, while the pipeline had improved by £12.7 million since December 31 2017 compared with £11.5 million in the same period last year.