Debt ridden Foxtons look for help

 
The new owners of Foxtons are battling to meet massive interest payments of over £2m per month on their purchase.

Private equity firm BC Partners is expected to appoint investment bank NM Rothschild to review the business.

BC Partners bought controversial Foxtons last year just as the housing market was turning down, paying £390m for the agency, which then had an annual turnover of £100m.

It was said that former owner Jon Hunt had called the top of the market when he sold. The price he achieved stunned the industry as he pocketed £360m.

But BC Partners may have found they paid dearly for the business in more ways than one. Their acquisition was highly leveraged, leaving Foxtons saddled with a huge debt mountain.

BC Partners funded the deal with about £260m of borrowing from Bank of America and Mizuho of Japan, leaving annual debt interest payments of £26m.

In July, Foxtons admitted it was trading significantly below expectation but said it was still able to meet its interest payments.

The Foxtons board is due to meet this week to decide on its brief to NM Rothschild, which is expected to involve a restructuring of its financing. This could include renegotiating short-term borrowing into longer-term debt.

The possibility of redundancies and closures is not ruled.

Meanwhile, Savills – whose interim results come out on Thursday – is expected to explain how it is coping with the bad market.

A spokeswoman told EAT: "In common with other property companies, our residential business has been affected by reduced volumes. We have undertaken some cost-cutting in a range of areas including headcount and marketing."