Countrywide shares yesterday recovered some of its earlier losses, but remained in negative territory after the property firm announced plans to raise £165m, while removing key members of its board including the chairman and CEO.
The group’s shares sank after announcing that it needs to restructure its existing debt in order to reduce its debt burden and exposure to creditors.
At one point yesterday morning, Countrywide’s share price was down 15.9% at 155p, having dropped from Wednesday’s closing price of 184.4p, but it did recoup some of its earlier losses to end the day at 165p, down 10.5%.
Countrywide revealed that it will raise £90m of the funds via a private share placement of 10.3 million shares to Alchemy, a private equity fund and shareholder, while also seeking a new £75m loan from its existing lenders to be repaid over four years.
A significant portion of the new funds will be used by Countrywide to clear existing loans worth in the region of £91.9m.
Part of the conditions for the new financing is that Paul Creffield, the group’s current managing director will retire and Peter Long, its executive chairman, will step down from the role.
Carl Leaver, former head of digital at Marks & Spencer, has been confirmed as Countrywide’s new chairman, while we wait to see who the new CEO will be.
However, the proposed transaction with Alchemy has been opposed by Catalist Partners, a significant shareholder in the company.
A statement from Catalist Partners said: “Catalist Partners notes Countrywide’s announcement. As one of the company’s largest shareholders, Catalist strongly opposes this unnecessary, ill-judged and dilutive transaction which, while clearly a very attractive deal for Alchemy, is destructive for shareholders and only serves to fund the continuation of a flawed “back to basics” business plan.”
The announcements by Countrywide, which were contained within firm’s half-year earnings results, showed that the group’s revenues fell to £173.8m this year as compared to the £241.6m recorded in H1 2019.
A range of cost-cutting measures and financial support from the government helped the group record a £14.9m profit.
Countrywide’s existing position was not helped by the collapse of its planned sale of consultancy Lambert Smith Hampton to a Danish businessman earlier this year.
The company was left looking for a new buyer for its commercial property business after the investor who agreed to pay £38m failed to come up with the cash.
Countrywide has now launched a high court case against the Monaco-based investor.
A company that has an inability to learn from it’s mistakes perhaps…..?
Continues to make the same mistakes in the hope that they are no longer mistakes….
It seems to me that this “people business”, like all agency businesses, needs to put it’s own people first. They will then reward their superiors with improved performance.
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To all independents who get beaten up every day from customers and lack of govt support from fake online agents..
We salute you.
Countrywide , with millions spent on ‘ expert ‘ board members. Haven’t got a clue .
Your doing well. #respect
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This is yet another extremely bad decision and terrible deal shredding shareholder value unnecessarily by a set of exiting BODS which have destroyed CWD by a series of them
One parting blow as they sail off into the sunset
Now allowing Alchemy a gift wrapped opportunity to takeover at a knockdown price just as things have picked up with the goodwill written right down
The £90m capital injection by Alchemy nets down after a staggering £8m of fees. Greedy hands in the bran tub. A payday loan is cheaper
It’s a terrible deal for shareholders who are diluted by 66% unnecessarily.
A picture of doom and gloom painted to justify this awful deal where the reality is far from it .
This is a set of BODS who have amended credit terms with the banks 6 times in the last 2 years
A wringing indictment of their management
Abortive merger with LSL
Abortive sale to the Dane without bacon for £38m with LSH and now compounding the errror incurring more costs chasing him for money which he hasn’t got nearly 12 months later
They have now written off £14m of the value of LSH in their books since.
They couldn’t have done worse with Headphones as CEO
All that is needed is a new set of BODS Step forward Robin Paterson
The irony is they don’t even need the money A £20m whip should see them safely through any choppy waters ahead .
The BODS have deliberately chosen not to update shareholders of the current situation since July where sales are up and house valuers run off their feet
For reasons best known to themselves painting a gloomy picture to get this deal over the line
The situation according to their website tells a different story
Sales are up 40% since July .11,662 recently sold then to 16,466 yesterday A staggering increase and certainly worthy of a mention
Valuers have been run off their feet
The coffers have been filing up since July ,That news firmly buried
Yet this is all they can say as a dampener
“However, it is still too early to assess the long-term impact of COVID-19 on the economy, and specifically housing transactions and, as a result the Group is unable to provide guidance for the full year ending 31 December 2020.”It was the 22nd October yesterday so they are nearly there with the majority of properties which are likely to complete this year already exchanged so they should have a fair idea!
Yesterday the brands showing inventories with plenty sold STC
Shareholders are being sold a pup and can only hope that Robin Paterson makes a determined challenge
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Good points well made.
The question is why this deal at this point? As you say, trading will have been strong, the pipeline for EA exchanges the best it’s been probably since 2014. This increases working capital and ability to service debt.
So why Alchemy and why now?
My guess: Peter and Paul have had enough and this deal would enable them to leave and make them feel they had ‘rescued’ CW, even though it shafts existing shareholders
For Robin, Catalist, quite simply he’s been outflanked – Alchemy have done the deal he should have done.
Ultimately the bottom line is that it only took £90m to take control of the business, which has some very strong parts yet a lot of branches that are profit vortexes.
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“Why Alchemy and why now”
Well perfect timing for Alchemy arriving now. All the bad news in H1 red flagged ,goodwill devalued further yet all the recent good news firmly buried.
Picking CWD up at a huge discount ,existing shareholders shafted and the whole merry dance starts again where Alchemy will exit with a huge gain
The BODS have shown nothing but an arrogant contempt for shareholders and Robin Paterson who as you say has been outflanked
A sweetheart deal Thanks for the goodbye cheque and goodnight
However it may not be all over yet . Our nautical friend Paterson is made of stern stuff
“Calm seas never makes a good sailor”
He has been around the block.
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New chairman head of digital at M&S Wow that is a well known property business!! Where did the last one come from? Oh yes a retailer, that’s ok then because that went really well.
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And that is their problem. They like all the other corporates agents that have long gone (remember Abby National and the long list of building societies and insurance companies) try to run the business on a commercial enterprise ‘on paper’. Moving figures around, slapping targets that cannot be met and have no contingencies for failure and management structure that has it head in the clouds with the troops running around like headless chickens doing their bidding and out of complete reality check with what is really happening and will happen at shop floor level. Not “I know what should happen” syndrome. Corporates are often top heavy with the wrong people.
The head of Prudential in the early 1990’s made it clear. They got out very quick when they realised that estate agency is not just some other commercial venture. It is specialised, a peoples business, a service industry that so often forgets its life line … its customers needs. So many financial institutions learnt this lesson, some the hard way and got out ….. eventually.
Bless You comment is right and it has always been the driving force of estate agency. The independent estate agent and will continue to be so. PB tried to kill you all off and failed after spending how many £Meggar millions!!!! If you look at some of the best agents in the country, they are the small operations in every town up and down the UK.
Your doing well. #respect
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Certainly was my intended point – a digital Chairman in an analogue business……..industry even
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Part of the conditions for the new financing is that Paul Creffield, the group’s current managing director will retire and Peter Long, its executive chairman, will step down from the role.
Should have happened when the full extent of the Platt disaster became evident.
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Both had already announced their intention to step down prior to this refinancing package. The only saving grace being Alchemy have made it clear in confirming their removal they don’t want either of them anywhere near the business from now on. No prizes for guessing why.
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Here are some responses from disgruntled shareholders from share chat sites .
“Diluting shareholders by 66%, criminal !!!”
“What an absolute mess and yet another example of the wool being pulled over the eyes of the smaller share holders and staff who continue to be utterly shafted by whoever is effectively running this train wreck. The BODS have all been next to useless as demonstrated by their complete lack of direction and any forceful input into the running of the business over the last few years as it went down the drain and most of them are now soon to be culled ( good riddance ) should the proposed Alchemy deal proceed with no doubt fat pay offs to all. Sheep the lot of them and that’s probably being unkind to our woolly friend”
“What a ridiculously complex corporate action!! Why buy back and issue new shares at the same time? I see the total fees seem to be around £8m – on a raise of £90m.I think it will take me a full 2 weeks just to understand the various possibilities, whether to tender or participate in the capital raise. But, on my understanding to date, the decision to allow directors full discretion on how excess applications under the OO will be allocated under the 2nd and 4th clawback allocations only heightens the uncertainty if I decide to support the OO. If I do so (and forego therefore the tender offer), I am leaving myself open to the whim of the directors on how my application might be treated.”
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Where to begin. But maybe the big news is – real estate companies are now really digital and data companies so a chair who is a tech/digital head is the correct move, as I stated months ago will Countrywide go Trump or Elon Musk – old school agency loses, in to bat tech savvy Chairman. This does not mean agents get replaced by robots, it means paper and legacy processes get digitally transformed and efficiency and profits start to come in. All they need now is Gary Barker to be CEO, that would ensure a profit driven model, rather than going begging to the bank every few months. Will Robin save the day, I hope so, as an asset stripping exercise or a fundamental re-structure are the two options, Gordon Gekko Vs Robin, I know what is better for the shareholders. At last that my epitaph as reported in the telegraph a few months ago is coming to pass Stanton say ‘ Countrywide’s failure to embrace the Proptech Revolution will make it a financially wounded dinosaur.’
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What nonsense. Digital is a helping tool, not a replacement.
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The reason why CWD are in such a mess today is they borrowed money to buy goodwill which has a nasty habit of disappearing starting as soon as the cheque is cleared and written off shortly afterwards.
Payments made for deals done in the past unlikely to be repeated again as proven.
Spent hundreds of millions paying out equity holders of businesses with hard cash rather than paying in paper.
.This would have at least kept them with some skin in the game and a good reason to stay on the premises.
Mix in an in an inept set of BODS and a Chief without any street fighting property experience its a recipe for disaster . Rinse and repeat
Although “digital transformation” is very useful all it would have possibly achieved is got them to Ground Zero faster
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Failure to adopt PropTech is not the problem. The problem, as others point out here, is they spent too much buying goodwill; they failed to invest when times were good; they have monstrous technical debt; they fired all the managers who drove the business from 2010 to 2015; the flexi product and retail were broken ideas; they have too many brands and hence inefficient marketing spend; they gave Platt too much rope; they are under-investing; there isn’t enough cross-sell from EA to FS, etc, etc.
I’m all for civilised debate and digital is a key component now in any business, let alone agency, but to lay it all at the feet of PropTech does not reflect well on you.
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Utter garbage, I love me some tech and have done since 1999 downloading the correct drivers for stuff and Pamela Anderson mpegs, there is nothing, repeat nothing, that I see for us or deployed by competitors that game changes anything, the key is good make that great staff, once that’s achieved its a self fulfilling outcome.
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I don’t think ‘Bad Leaver Barker’ is the solution. Robin wouldn’t allow it either.
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Robert
A very unhappy shareholder here and had to say something Just imagine all those negotaiters at Dixons beavering away earning their £2k fees Literally cleared the shelves since July unacknowledged which will disappear down a black hole of £8m fees to raise monies which arent even needed .Its a disgrace
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