UK property agent Foxtons taps markets for additional cash, furloughs employees

[BENGALURU] UK property agency Foxtons issued new shares and furloughed about 750 of its employees on Friday after the country's lockdown threw the housing market into a deep freeze, leaving companies short of cash.

Foxtons said it placed new shares worth 20 per cent of its existing capital at 40 pence a piece, representing a premium of 4.2 per cent to Thursday's close of 38.40 pence, as it seeks to raise up to £22 million (US$28 million).

That boosted the company's share price, which surged 15.9 per cent to 44.5 pence by 1217 GMT, after falling 54 per cent since the start of this year.

Foxtons also said that all its executive directors and non-executive directors had agreed to a 20 per cent reduction in base pay and fees, respectively for April and May.

Britain's estate agents, already in a year-long slump, are severely strapped for cash amidst the coronavirus crisis, with property viewings halted and offices closed to the public as part of wide-ranging measures to reduce Covid-19 infections.

Foxtons is the latest UK company to tap the market for funds since the crisis began, following online fashion retailer ASOS and WH Smith 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 time to enable the company to maintain liquidity in a reasonable worst-case scenario."

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

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

Foxtons reported a 5 per cent fall in lettings revenue in January-March to 13.9 million pounds.

The impact of a ban on tenant fees for lettings, introduced as part of measures to ease the financial hardship of the coronavirus crisis, was 0.8 million pounds, Foxtons said without elaborating.

As of March 31, it said it had a cash balance of £21.9 million, including the fully drawn revolving credit facility of £5 million. 

REUTERS