The Financial Times this morning says that Countrywide suffered a failed bond issue earlier this year, forcing it to rely on an emergency equity raising to shore up its balance sheet.
The newspaper says: “Two people briefed on the situation said Countrywide, until recently the UK’s largest estate agency group by branches, tried in May to issue £250m of high-yield bonds. Through its lenders - HSBC, Barclays and Santander - the group approached investors to raise a five-year bond at an interest rate of about 8 per cent, but prospective buyers said they would require at least 9 per cent, one person said. The bond aimed to pay off a revolving credit facility of which the company had drawn down £210m by the end of 2017. It would also have added to the cash on Countrywide’s balance sheet.”
A long-term share value slide (down 90 per cent over five years) means Countrywide has a maket capitalisation of some £120m but debt of around £200m.
“A successful bond issue would have left net borrowing at three times earnings, one person said. However, it was unable to attract enough interest to issue the bond. After the failure of the bond issue, the company turned to raising fresh equity” reports the paper.
Countrywide is expected to release its interim results - delayed from last week - tomorrow morning at 7am; this will be covered extensively on Estate Agent Today.
The company has told the FT: “Countrywide announced on 24 July 2018, it continues to engage in constructive dialogue with both its lending banks and its shareholders and will be announcing its interim results and full details of its proposed long-term capital structure by 2 August 2018.”
Countrywide says Oaktree - its biggest investor, owning 30 per cent of the group - is supportive of its latest fund-raising efforts.