Countrywide's share price has dropped sharply following the announcement of the company's rescue plan - but the firm itself says this is merely a 'reset' by investors and not a cause of worry.
Within a few minutes of markets opening at 8am the price plummeted from around 50p to a mere 10p, before ending the morning at just under 20p: it languished just under this level all afternoon before closing at just 18.58p.
However, Countrywide executive chairman Peter Long told Estate Agent Today: "We're resetting the capital structure. We're raising £140m [in the new plan] and that's more than the market capitalisation of the company. We've got huge support from shareholders and there's bound to be a reset."
The price fall this morning follows release of the agency group's long-awaited rescue plan at 7am.
In an announcement to the London Stock Exchange, in which Countrywide revealed a drastic 61.5 per cent fall in half-year earnings, the firm said: “Countrywide is today setting out the details of its Strategy and Turnaround plan announced on 8 March 2018, which includes the announcement of the launch of a placing and open offer to raise gross proceeds of £140 million, which aims to strengthen the balance sheet, reduce leverage and enable the Group's turnaround.”
The group is naming the equity sale ‘the Capital Refinancing Plan’ and says it is fully underwritten.
It added: “The Capital Refinancing Plan also includes an amended four year Revolving Credit Facility (the Amended Credit Facility) maturing September 2022 which provides the Group with the financial flexibility to execute its strategy and turnaround plan.”
Also announced in the trading statement were two senior managerial promotions - Paul Creffield, previously chief operating officer, joined the board as Group Managing Director, and Paul Chapman became Chief Operating Officer, “providing the management expertise we need to execute the turnaround.”
In the statement to shareholders executive chairman Peter Long said: “The capital refinancing announced today is a significant milestone ... 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.
"We now have industry expertise and experience across the Group and I am delighted that we have further strengthened the Board and Executive Management team through internal promotion.
"With well-known and trusted brands, together with our able and dedicated colleagues we have laid down a strong foundation to build upon and I am confident that we will return Countrywide to profitable growth and long-term success.”
A prospectus for potential investors has been released.
The interim figures released at the same time as the rescue plan revealed that only Countrywide’s financial services earnings - for mortgages and valuations - had improved in the six months to the end of June.
Both sales/exchanges and properties under lettings management slumped.
Adjusted earnings before interest, tax, depreciation and amortisation collapsed to £10.7m from £27.8m a year ago.
The total of sales/exchanges in the first half of 2018 were just 22,026 - this time a year ago the figure was 27,100.
The number of properties under management was 124,767 - a year ago it was 126,728.
Mortgages arranged by value in the first half of the year came to £9.5 billion - this is considerably up on the comparable 2017 figure of £7.9 billion.
Countrywide said its sales pipeline is down nine per cent year on year - slightly better than last December's figure of 15 per cent.
Although the figures clearly show the scale of Countrywide’s problems, they are not as serious as some commentators predicted - nor, so far at least, have the suggested solutions involved the publicised sale of some of the company’s crown jewels such as Hamptons International, as had been predicted in some quarters.