Countrywide has this morning announced the proposed sale of its commercial wing, Lambert Smith Hampton, for £38m cash.
It has also announced an amended credit facility with its lenders to continue with its turnaround plan in a “challenging and uncertain market environment”.
Shares rose in early trading in response, up almost 14% by 9.30am.
Making the announcement to the stock exchange, Countrywide said that the sale of Lambert Smith Hampton deal will allow it to concentrate on its residential business.
The purchaser is a private buyer, John Bengt Moeller. He is the founder of Great Global Holdings, a holding company for a number of UK and international companies in the business of commercial property.
Countrywide said that the sum being paid represents a fair valuation for the Lambert Smith Hampton business, representing six times its adjusted EBITDA.
The group said that the sale will “significantly improve Countrywide’s capital structure” and allow it to reduce its debt.
Countrywide also told the stock exchange that it is simplifying its share capital. The shares will be consolidated 50 for one, reducing the number of ordinary shares in issue. In simple terms, it could boost the share price from around 5p to 250p. Last year, in a cash call to investors, new shares were issued to raise money; a consolidation will reduce the number of shares.
Both moves are recommended by the Countrywide board and are subject to shareholder approval, likely to be given at a general meeting on December 23, with the sale likely to complete by December 31.
Today’s statement to the stock exchange said: “In addition to the sale agreement of Lambert Smith Hampton and the proposed share consolidation, on 28 November 2019 the Group agreed an amended credit facility with its lenders.
“The new facility provides the Group with the financial flexibility to execute the turnaround plan while operating in what continues to be a challenging and uncertain market environment.”
Countrywide told the City that it is continuing to make “operational progress” its turnaround and is on course to deliver a full year result in line with the board’s expectations.
Executive chairman Peter Long said: “The sale of the Lambert Smith Hampton commercial business strengthens the group.
“Once completed we believe that the group will be in a more advantageous position in our core residential market.”
Lambert Smith Hampton had been put up for sale earlier, in 2016, but at the time led to no transaction, and some ten months later Countrywide announced that it was no longer for sale.
Countrywide bought the business in 2013, paying £34.1m in cash.
Managing director Paul Creffield said that the sale of Countrywide’s commercial arm is likely to be well received by staff, as the business’s turnaround continues, “giving a future for our people”.
He told EYE this morning that Countrywide will now concentrate on its three traditional businesses – sales and lettings, financial services, and business-to-business. He also revealed that Countrywide had not put Lambert Smith Hampton up for sale, but had been approached.
- Countrywide has also announced that Polly Ogden Duffy will take up the post of managing director for John D Wood & Co. from January 1. For much of 2019 she and Jonny Dyson have taken joint responsibility for leading the business since the sad death of previous MD Nick Taylor earlier this year. Commenting, Paul Chapman, Countrywide managing director sales & lettings, said: “I am delighted that Polly will lead John D Wood & Co with continued support of Jonny Dyson and the leadership team. We wish Polly and the team every success in her new role.