The UK’s largest estate agent group Countrywide, which owns firms such as Hamptons and Bairstow Eves, saw its shares crash as it announced an emergency fundraising.
More than £164million was wiped off its market value, causing its largest shareholder, US investment firm Oaktree Capital, to take a £22.5million hit. The estate agent group revealed that it would place 1.4bn new shares for 10p each in the hope of raising £140million.
But the 10p price was a heavy discount to Countrywide’s value the previous day, pushing shares down 62.8 per cent, or 31.37p, to 18.58p.
AJ Bell’s investment director, Russ Mould, said: ‘As a traditional operator, rather than a disruptive web-based rival like Purplebricks, Countrywide has lots of fixed costs relating to estate agency branches and staff which cannot immediately be taken out in response to weakening demand. In other words, it has high operational gearing.’
Estate agent Countrywide revealed that it would place 1.4bn new shares for 10p each in the hope of raising £140m
Countrywide also has a heavy debt load, unlike London-focused rival Foxtons, which has become harder to pay back as the property market has weakened.
Mould warned that the combination should be ringing alarm bells for investors.
But analysts at Peel Hunt said the £140million should help to reduce the debt pile by around 50 per cent. Countrywide’s income for the first half slid 9 per cent from £332.7million to £303.6million. Its loss rocketed from £0.5million last year to £205.8million.
The FTSE 100 had another day of decline, falling 1.01 per cent, or 76.98 points, to 7575.93 as miners dragged.
Stock Watch – Stride Gaming
Shares in online bingo and slot game operator Stride Gaming crashed after it announced the Gambling Commission had slapped it with a significant penalty.
The firm did not expand on what it was being penalised for, other than to say the fine was for how it ran its gambling-related businesses.
Stride is taking advice on whether to appeal against the hefty fine, but its shares ended down 33.7 per cent, or 42.5p, at 83.5p.
They have fallen 66.2 per cent since the start of 2018.
Rio Tinto was down 3.6 per cent after disappointing results yesterday, while Anglo American lost 3.1 per cent, Fresnillo 3.1 per cent, Antofagasta 3 per cent and Glencore 2.8 per cent as the prospect of a US-China trade war reared its head again.
British satellite operator Inmarsat drifted down by 7.5 per cent, or 43.6p, to 537.8p as it revealed profit sank 32 per cent to £57.9million.
Chief executive Rupert Pearce assured investors that, though there was lacklustre growth in Inmarsat’s maritime division which is the biggest contributor to revenues, the turnaround was slowly underway.
Earlier this year it rejected a £3.2billion bid from competitor Echostar for being too low, prompting the rival to walk away.
The shares have since dropped down to Earth as investors have lost hope of cashing in.
Pearce said yesterday that the business was not up for sale, and he was confident his debt-laden company could thrive alone.
Iron ore miner Ferrexpo was weighed down by falling production in its half-year results, though revenue climbed 4.4 per cent to £473million. Miners have been hit by lower iron ore prices, while Ferrexpo has suffered as the currency in Ukraine, where its mines are located, has appreciated.
Increasing demand in China for higher quality iron ore pellets, which are better for the environment than other options, would drive future growth, it said. Shares fell 19.8 per cent, or 40p, to 162p.
There were also signs of life at the UK’s largest technology firm Sage Group, which has been struggling to win new business.
Sage, which sells accountancy software, increased revenue by 6.8 per cent in the third quarter of its financial year. Shares rose 3.4 per cent, or 21.4p, to 646.8p.
Mediterranean high-end property investor Dolphin Capital was raking in the cash through more exotic means, as it sold a luxury hotel and 20 plots in Kilada Hills Golf Resort in Greece for £112.2million.
Dolphin’s shares leapt 12.1 per cent, or 0.7p, to 6.5p. Its founder, Miltos Kambourides, said cash from the sale would be used to develop Kilada Hills, which he called the company’s ‘most valuable asset’.