Countrywide shareholders approve £140m cash call

(Sharecast News) - Countrywide shareholders approved a £140m emergency fundraising at the estate agency owner's annual general meeting on Tuesday.The company, which owns Bairstow and Eves and Hamptons, said more than 98% of its shareholders backed the cash call.Around £115m of the proceeds will be used towards paying down Countrywide's £200m debt, with a further £14m for general corporate purposes and to support working capital.Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "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."The news comes just days after the company cancelled a £20m bonus scheme for top management."Indeed 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% decline in London housing transactions last year, which compounded the operational mistakes made by Countrywide itself," Khalaf said."Looking forward, it's a long road to recovery for Countrywide. The sales pipeline is not disappearing quite as quickly as it was, but the latest published decline of 9% is still pretty steep. In the immediate future the company also faces a prospective £21m revenue headwind from legislation banning letting fees being charged to tenants, expected to come into force next year."At 1430 BST, the shares were down 7.8% to 13.74p.