Embattled estate agent Countrywide has revealed a £90 million lifeline investment and changeover at the top under plans to cut its debt mountain and revive its fortunes.
The planned capital raise will see private equity firm and current shareholder Alchemy effectively take control of Countrywide, with a stake of between 50.1% and 67.7%.
The deal will also see a management overhaul, with executive chairman Peter Long to be replaced by Carl Leaver – the former chief executive of hotels group De Vere – and the appointment of a chief executive officer later this year.
Countrywide managing director Paul Creffield will retire in 2021.
Shares in the firm tumbled as much as 16% on the announcement of the deal, which comes after a testing few years that have seen Countrywide’s share price slump on the back of mounting losses.
Countrywide admitted it is at a “critical inflection point” and urgently needs to reduce its mammoth £90.2 million debt pile.
The group said the investment, together with a new four-year loan from its lenders, will slash its debts by £50 million.
It will also bolster its balance sheet and fund investment as part of its turnaround announced in March 2018, according to the firm.
Mr Leaver said: “With the right capital structure and Alchemy as a supportive controlling shareholder, I am confident that there is a very bright future for Countrywide.”
Outgoing boss Mr Long said the deal marks an “exciting new chapter” for Countrywide.
“Countrywide now has a sustainable capital structure that will allow it to thrive,” he added.
The deal was announced as Countrywide’s results showed it slumped to a pre-tax loss of £44.3 million in the first half of 2020.
It said recent trading was “buoyant” as the stamp duty holiday on properties up to £500,000 has helped spur on a mini housing boom since the lockdown.
But the firm held off from giving full-year guidance due to ongoing uncertainty amid the pandemic.