Foxtons targets £22m equity raise amid London house prices blow
Foxtons estate agent has proposed a major £22m share sale representing about 20 per cent of issued stock as it furloughs staff.
The £22m equity raise will allow Foxtons to repay its revolving credit facility and to boost its liquidity in the face of the coronavirus shutdown.
The share sale would bolster its cash balance of £21.9m, and repay Foxton’s fully drawn credit facility of £5m.
Foxtons fears slow London recovery
Foxtons warned of a potential “liquidity gap” if the lockdown lasts until the end of August.
A slow recovery in London house prices could further hurt the estate agent. It has seen a sustained fall in profit due to the capital’s falling house prices.
Foxtons chief executive Nic Budden said: “The London property market has been severely disrupted by the necessary measures the country has taken to contain the Covid-19 pandemic.
“The board considers it prudent to raise additional capital at this time to enable the company to maintain liquidity in a reasonable worst-case scenario.
“This is an extremely challenging period for everyone but our people have been amazing in responding and I am confident we have taken the right measures both for our stakeholders and the business so that we can emerge from this crisis with the capability and financial position to thrive.”
Commissions halve after March lockdown
March’s coronavirus lockdown has meant the housing market has ground to a halt.
And group revenue for Foxtons sank three per cent to £23m in the first quarter.
Lettings revenue dropped five per cent to £13.9m and sales revenue was flat at £7.1m.
Commissions earned in the first three weeks of the UK lockdown were down 47 per cent year on year.
Foxtons said it was impossible to predict how badly coronavirus will affect it.
The estate agent will price the 55m new shares at 40p each.
Ithas put around 750 staff onto the government’s job retention scheme. That will see the state pay 80 per cent of those workers’ wages to avoid redundancies.
Around 350 staff are working from home and those earnings above £40,000 have been asked to take a 20 per cent pay cut for April and May.