Embattled estate agency Countrywide is proposing an open share placing in an attempt to refinance its turnaround plan.
It is proposing a firm placing of 1,114,419,569 shares and an open offer of a further of 285,580,431 shares at 10p each, which will raise a combined £140m.
The two placings will raise around £129m in aggregate after costs, and will be used to speed up balance sheet deleveraging and provide improved liquidity and covenant headroom. Net debt will be reduced by around 60% with the issue.
Shares have fallen by 60% in early trading.
The refinancing includes an amended four year revolving credit facility which increases the group’s covenant net debt to an adjusted EBITDA ratio of 5.25, from 3.25 before.
The issue is conditional on shareholder approval, with a vote taking place on the 28th August, with all director shareholders and the board voting in favour and taking some of the proposed shares.
Two funds advised by Oaktree Capital Management – OCM Luxembourg Castle Holdings and OCM Luxembourg EPF III Castle Holdings – have said they will support the refinancing, with EPF III taking a further £24m of the firm placing.
Peter Long, executive chairman, said: “It will enable us to build upon the progress we have made to date on our three-year recovery plan as we deliver our return to growth strategy. Although it is still very early in the turnaround, we are encouraged by the operational improvements that we are making and the tangible results that are being achieved.”
Countrywide separately released its results for the six months to the end of June, which the board said are “encouraging”.
Excludes exceptional items, amortisation of acquired intangibles, employment-linked contingent consideration and share-based payments (net of taxation impact for basic EPS)
Income from the sales and lettings declined by 12% to £159.1m, while its financial services and B2B segments declined by 6% and 4% respectively, to £40.2m and £103.7m.
Paul Creffield has also been appointed to the board as group managing director while Paul Chapman has become the chief operating officer.
The group owns Lambert Smith Hampton, amongst other business, which it has been in talks to sell.
LSH saw its value remain steady over the period.
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