17th Apr 2020 10:02
(Alliance News) - Foxtons Group PLC on Friday said it will raise GBP22.0 million in new capital to avert a liquidity crisis in the event the UK government-imposed lockdown lasts until the end of August and is followed by a slow recovery in London housing market.
The estate agent added that it is impossible to predict Covid-19's impact on remainder of 2020 at this point of time due to the uncertainty of the situation, but the company has taken several steps to cut costs including closure of all branches from March 23, furloughing around 750 employees and cutting pay package of other employees and directors.
Foxtons additionally has deferred all February taxes, payable in March, by one month and is reducing all other discretionary spend.
Shares in the company were up 12% at 43.10 pence each in London on Friday morning.
Foxtons plans to issue up to 54.9 million new shares at 40p per share to raise GBP22 million. The placing price represents a premium of 4.2% to 38.4p share price on Thursday. All Foxtons directors, both executive and non-executive, intend to participate in the share placing, it said.
At March-end, Foxtons had a cash balance of GBP21.9 million, including the fully drawn revolving credit facility of GBP5.0 million. However, GBP7.0 million of this cash represents creditor payments that now are subject to discussions over payment terms and discounts, the company said.
The placing proceeds will be used by Foxtons to repay the GBP5 million loan and will provide sufficient liquidity to support the business through the period of disruption.
Foxtons recorded a dip in first-quarter revenue as the UK government lockdown measures impacted trading for the final two weeks of March. The company, however, saw strong and steady growth in sales commission pipeline during the first two months of 2020.
Revenue for the three months to March-end fell 3% to GBP23.0 million from GBP23.8 million a year ago. Lettings revenue fell 5% to GBP13.9 million, sales revenue was flat at GBP7.1 million and mortgage broking revenue was down 5% to GBP1.9 million.
"Whilst demand and supply side indicators of performance in both sales and lettings have been negatively affected since the lockdown was announced, it is too early to forecast the exact impact the lockdown will have on business performance. Commissions earned in the first three weeks of the 'lockdown' period were down 47% on the prior year," Foxtons said.
By Tapan Panchal; [email protected]
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