UK estate agent Foxtons taps markets for extra cash and furloughs employees

(Reuters) – British property company Foxtons FOXT.L issued new shares and laid off around 750 of its employees on Friday after the country’s lockdown plunged the housing market into a deep freeze, leaving businesses strapped for cash.

FILE PHOTO: A Foxtons estate agent sign is seen outside a branch in west London, Britain July 29, 2016. REUTERS/Peter Nicholls

Foxtons said it placed new shares worth 20% of its existing capital at 40p apiece, representing a 4.2% premium to Thursday’s close of 38.40p, while it is looking to raise up to 22 million pounds ($28 million).

That sent the company’s share price up 15.9% to 44.5p as of 12:17 GMT, after falling 54% since the start of this year.

Foxtons also said all of its executive directors and non-executive directors had agreed to a 20% reduction in base salary and fees, for April and May, respectively.

UK estate agents, already in a year-long slump, are seriously strapped for cash amid the coronavirus crisis, with property viewings halted and offices closed to the public as part of sweeping measures to reduce COVID-19 infections.

Foxtons is the latest UK company to tap into the fund market since the onset of the crisis, after online fashion retailer ASOS ASOS.L and WH Smith SMWH.L among others.

“The London property market has been severely disrupted by the necessary measures the country has taken to contain the Covid-19 pandemic,” Foxtons chief executive Nic Budden said.

“(The) board considers it prudent to raise additional capital at this stage to enable the company to maintain liquidity in a reasonable worst-case scenario.”

The London-based company said the net proceeds from the placement will be used to repay the revolving credit facility and to provide sufficient liquidity to combat the impact of the pandemic.

Foxtons, which rivals Countrywide CWD.L, also said the commissions he earned in the first three weeks of the UK lockdown were down 47% compared to the same period last year. The lockdown has only been in place for three weeks.

Foxtons reported a 5% drop in rental income in January-March to £13.9million.

The impact of a ban on rental charges for tenants, introduced as part of measures to ease the financial hardship of the coronavirus crisis, was £0.8million, Foxtons said without giving further details. details.

As of March 31, it said it had a cash balance of 21.9 million pounds, including the fully drawn revolving credit facility of 5.0 million pounds.

Reporting by Samantha Machado in Bengaluru; Editing by Saumyadeb Chakrabarty and Susan Fenton

Penny D. Jackson