Countrywide seeks £140m to shore up finances

(Sharecast News) - Countrywide announced plans to raise £140m from investors to strengthen its finances after the estate agent lost more than £200m in the first half. Countrywide, whose brands include Hamptons and Bairstow Eves, said the emergency fundraising would bring in about £111.4m from a firm share placing and a further £26.8m through a placing and open offer. It will sell the shares to new and existing investors for 10p a share - an 80% discount to the price on 1 August.The company's shares dropped 64% to 18p at 09:24BST.The placing will raise about £129m after underwriter fees and other costs. It will use the money to pay off about 60% of its debt of £211.7m, reducing its interest payments. Countrywide has negotiated new debt covenants with its lenders to give it more flexibility to implement a turnaround plan.The company plunged to a pre-tax loss of £205.8m in the six months to the end of June from a £0.5m loss a year earlier.Peter Long, Countrywide's executive chairman, said: "The capital refinancing announced today is a significant milestone for the group. 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."Countrywide said the structure of the share placing was necessary to attract new investors while giving existing shareholders the chance to take part. The deep discount to the share price is based on "prevailing market conditions and anticipated demand for the New Ordinary Shares," it said. Oaktree, Countrywide's biggest investor, has agreed to subscribe for £24m of the new shares.Countrywide has struggled to stay afloat with a heavy debt burden in the midst of a stagnant housing market and fierce competition from online rivals such as Purplebricks. Alison Platt resigned as chief executive in January after a series of profit warnings.Long took over running the business as executive chairman but has been juggling various jobs. Paul Creffield, who became chief operating officer when Platt left had been made managing director with a seat on the board.