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An activist investor has built up a 4% stake in embattled online estate agent Purplebricks and is calling for the chairman to resign after the group’s share price plummeted.
A letter written on behalf of Adam Smith’s investment vehicle, Lecram Holdings, to Purplebricks chairman Paul Pindar has demanded “urgent action” to stabilise the firm and “restore its credibility” among investors.
It comes after Purplebricks has seen its share price plunge after sinking to a loss and losing market share to rivals.
In addition, the firm has suffered higher staff costs due to switching field agents from self-employed status to full employment last year, while it also recently revealed a £3.6 million hit from claims related to failings in how it communicated with tenants.
Its share price has fallen by more than 97% from nearly 514p in August 2017 to just under 15p at close of trading on Friday.
The letter from Lecram said Mr Pindar has “presided over this highly unsatisfactory performance and you should now stand aside in favour of a replacement with necessary experience and skills to address urgently the company’s continuing cash burn and operating performance within the estate agency sector”.
If his stake in Purplebricks rises to at least 5%, Mr Smith will be able to call an extraordinary shareholder meeting.
But a spokesman for the estate agency criticised Mr Smith – who started building up a stake in the firm last month – for failing to agree to talk to the board.
He said: “We sought to meet with Lecram Holdings to discuss their concerns.
“They declined. It’s disappointing that they chose to go to the media instead, rather than engage with us.”
He added: “The board is well aware of the urgent need to turn around the performance of the business and become cash flow positive in the near term.”
Purplebricks’ new chief executive, Helena Marston – who took over three months ago after former boss Vic Darvey stepped down due to “personal reasons” in March – is working on turnaround plans, which will be unveiled alongside delayed full-year results in early August.
But her start date was also put back because due diligence checks took longer than expected.
The former chief operating officer of Purplebricks voluntarily declared herself bankrupt in September 2014, though this was discharged in September 2015.