Countrywide received an injection of £140m today after shareholders approved the purchase of new shares by 98 per cent at the company’s annual general meeting.
City firms Oaktree Capital Management and Brandes Investment Partners, already shareholders in Countrywide, took part in the capital refinancing resolution.
Of the total amount raised by the share issue, £115m will be used to pay down debt, £14m for “general corporate purposes” and to support working capital, and £11m on fees and expenses.
Previous to today’s AGM, plans to vote on new remuneration plans to reward directors depending on share prices up to the end of 2021 were withdrawn from the agenda.
Earlier this month, Mortgage Strategy reported on Countrywide’s share price plunging 91 per cent in one year amid losses of £206m and poor response to a discounted share offer.
Hargreaves Lansdown senior analyst Laith Khalaf says: “Countrywide is back from the brink thanks to a shareholder bailout, though the estate agent is still fighting an uphill battle on a rather slippery slope.
“The injection of £129m of cash will keep the wheels turning for now, but that money is being used to pay down debt rather than to fund growth. In other words, this cash is a lifeline rather than a springboard.
“Some of the wounds Countrywide is nursing were self-inflicted, though political and fiscal decisions have played a part too. In particular, stamp duty reforms and Brexit concerns prompted a 22 per cent decline in London housing transactions last year, which compounded the operational mistakes made by Countrywide itself.
“Countrywide now has to retrace some of its steps and rebuild its business. Shareholders will be hoping the housing market doesn’t throw the estate agent a curveball while it’s climbing back off its knees.”