Countrywide has revealed that it is to raise a further £165 million and has announced a new chairman, former M&S digital chief Carl Leaver, and a new CEO, who will be announced soon.
The company has admitted that it is at a ‘critical inflection point and is in urgent need of recapitalisation to reduce its net debt and lessen its exposure to its lenders’, and that the Group remains burdened by excessive debt.
The new cash is to be via a £90 million capital raise through an investment by private equity firm and shareholder Alchemy. This will be via a 66 million share issue and a new £75 million loan from its existing lenders with a four-year term.
A significant portion of the new funds will be used to pay off its existing debts, which are currently £91.9 million.
The conditions of the new finance package mean that current group managing director Paul Creffield (left) is to retire and Executive Chairman Peter Long is to step down.
The announcement is within its half-year results which reveal £44.6 million of government help including deferred VAT and deferred PAYE and national insurance payments.
It has also persuaded its branch landlords to move to a monthly payment scheme, rather than the usual quarterly payment payments.
But income dropped by nearly a third during the Covid monthly from £241.6 million for the same period (January to June) last year to £173.8 this year.
Savage cost-cutting and the government financial aid helped Countrywide stay profitable with an EBITDA of £14.9 million, down from £19.2 last year despite an £8 million tenant fees ban hit.
Some £10.8 million of this profit came from sales and lettings, a 23% improvement, suggesting that the company’s turnaround plan is kicking in.
“With the right capital structure and Alchemy as a supportive controlling shareholder, I am confident that there is a very bright future for Countrywide. I look forward to helping to harness the capability of the Countrywide team to deliver for customers and, ultimately, creating value for shareholders,” says Leaver (right).
Countrywide’s other big shareholder, Catalist, is strongly opposed to the debt plan – read our separate story here.