Foxtons looks to raise £22m through share issue

Foxtons Group is looking to raise around £22m from a new share issue. The estate agent said it intended to issue up to 54,993,367 new ordinary shares, representing up to 19.9% of its existing share capital, at a price of 40p per share. The price reflects a premium of around 4.2% to the 16 April closing price of 38.4p per share. Foxtons said the net proceeds would be used to repay in full its £5m revolving credit facility and give it “sufficient liquidity and flexibility” in case of a protracted period of lockdown and a subsequent slow recovery in the London property market. The firm added that it decided to go ahead with a share issue rather than look to borrow more or implement further cost-reduction measures, which could damage its long-term operational capacity. All Foxtons directors, both executive and non-executive, intend to participate in the share issue. Numis Securities is acting as sole bookrunner on the share issue. Foxtons also reported that its revenue fell by 3% to £23m in the first quarter of 2020, compared to £23.8m in 2019. Lettings revenue fell by 5% to £13.9m, with an impact totalling £800,000 from the tenant fee ban in the period, while sales revenue was flat at £7.1m. Foxtons’ mortgage broking revenue also fell by 5% to £1.9m. The firm said that although it was too early to forecast the impact of the UK’s lockdown, the business commissions earned in the first three weeks of the lockdown period were down 47% on the prior year and it expected to reduce the average monthly cash outflow of the business from £9m to £3m by the end of April. As part of its cost-cutting methods the firm confirmed that it has furloughed 750 employees under the government’s Coronavirus Job Retention Scheme, while around 350 employees were working from home. Employees earning a basic salary of more than £40,000 who were not furloughed were asked to take a 20% pay cut for April and May, with around 80% agreeing to do so. In addition, all executive directors at Foxtons have taken a 20% reduction in base pay and all non-executive directors a 20% reduction in fees for at least April and May. Foxtons added that it was negotiating with some of its landlords about deferring lease payments. To send feedback, e-mail louise.dransfield@egi.co.uk or tweet @DransfieldL or @estatesgazette