Countrywide investors clash over estate agent’s planned rescue by private equity firm
Britain’s biggest estate agency is at the centre of a furious row as shareholders clash over its future.
Countrywide said private equity firm Alchemy Partners was planning to hand it a £90million lifeline.
The deal would give Alchemy a stake of between 50.1 per cent and 67.7 per cent and see Countrywide executive chairman Peter Long replaced.
Countrywide executive chairman Peter Long would be replaced if the estate agents £90m rescue by private equity firm Alchemy Partners goes ahead
But activist investment firm Catalist Partners, which has a 10.5 per cent stake in Countrywide, branded the plan – which will see existing shareholders’ stakes drastically watered down – ‘ill-judged’ and ‘unnecessary’.
Shares in Countrywide slid 10.5 per cent as investors weighed up Alchemy’s proposals, which are backed by the board.
Countrywide told investors it was at a ‘critical inflection point’ and in ‘urgent need’ of new money to pay down its ballooning debt pile. It has debts of around £90million, but its market value is just £60million.
Over the past couple of years it has been accused by shareholders of poor management, over-expansion and a lack of investment in technology and innovation.
Losses for the first half of this year widened from £36million to £40million as it was forced to write down the value of parts of its business.
The Alchemy deal would allow Countrywide to pay off its loans, and focus on expansion.
But due to the enormous amount of new shares which Alchemy is buying, investors including Catalist will see their stakes diluted.
Catalist – co-founded by property entrepreneur Robin Paterson – said it ‘strongly opposes this unnecessary, ill-judged and dilutive transaction which, while clearly a very attractive deal for Alchemy, is destructive for shareholders and only serves to fund the continuation of a flawed ‘back to basics’ business plan’.
Alchemy is proposing a major shake-up. It is clearing out the board and executive chairman Long, formerly of Royal Mail, will quit.
He will be replaced as chairman by Carl Leaver, former chairman of bust restaurant chain Carluccio’s.
If the deal is backed by shareholders next month, Alchemy wants to cut costs, invest in IT and customer service centres, boost the group’s other businesses such as mortgage advice, and potentially snap up rivals.
But Catalist has its own plans for Countrywide. Earlier this year it wrote to Long calling for a board reshuffle and a break-up of the firm.
While Alchemy believes Countrywide is stronger as an estate agent group with connected business lines, such as mortgage advisers and surveying experts, Catalist wants it to focus on being an estate agent and consolidate its brands under a few names, selling other firms.