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Crisis deepens at UK’s biggest estate agent Countrywide with City cash call

by RUSSELL LYNCH
Estate agents: Countrywide has more than 850 branches and is behind brands including Bairstow Eves and Hamptons

The UK’s biggest estate agents chain was plunged deeper into crisis on Monday as it issued another profit warning and plans for an emergency fundraising to cut its debt pile.

Countrywide, which has more than 850 branches and is behind brands including Bairstow Eves and Hamptons, saw its shares plunge 23%, or 17.8p, to 60.7p as it delivered more grim news for investors.

The firm, up against a weak housing market, new online rivals and attempting to reverse a disastrous overhaul by the previous chief executive, admitted first-half profits would be around £20 million lower than last year.

Countrywide also flagged up a major cash call to slash its debt by “at least 50%” to put its balance sheet on a firmer footing through a rights issue. Although Countrywide’s major shareholder Oaktree, which owns 30%, and the agent’s major lenders support the plans, a significant fundraiser is needed to cut net debt, which stood at £192 million at the end of last year.

Peel Hunt’s Gavin Jago said: “We believe the group will be targeting a gross raise of around £125 million. After fees (estimated at around £10 million) this could reduce pro-forma debt levels to around £85 million. Countrywide will update the market on full details of the fundraising on July 26.

The estate agent warned that the wider market remains subdued and the firm has “experienced longer transaction cycles” as jittery buyers sit on their hands.

Although the company is focusing on rebuilding its sales pipeline it does not expect to make up the £20 million profit gap by the end of the year. Former TUI boss Peter Long has been running the business since January, when former boss Alison Platt was ousted.

Platt attempted to drive a “retail” approach across the business with an overhaul which brought Countrywide’s sales and letting business under the control of an industry outsider.

She also tried unsuccessfully to force agents into a centralised model, diluting the impact of local expertise and autonomy as well as building up overhead costs. A raft of experienced staff left the business at the time.

The share fall continues the annus horribilis for investors with shares now worth barely a tenth of the level at which Countrywide returned to the stock market five years ago.

The agent was taken private at the top of the market in 2007 for £1.1 billion.