Doubt over Countrywide rights issue as Purplebricks wins price boost

It’s being suggested that Countrywide’s rights issue, previously expected to be announced this week, may now be delayed.

The Times says the hitch may be because Countrywide’s executive chairman, Peter Long, has to deal with major issues at the other listed company of which he is the chair - and that’s Royal Mail.

In a profits warning last month Countrywide said it would be seeking new funds to cut its £200 million debts by at least half; over the weekend, as Estate Agent Today reported on Sunday, it was revealed that preparations were in hand for an announcement of a £100m rights issue within days.

But now it appears Peter Long has another crisis on his hands. 

At the end of last week Royal Mail shareholders rejected plans for executive pay put forward by Long and the board of that company.

The directors' remuneration report was rejected by over two thirds of shareholders in a non-binding vote at Royal Mail's annual meeting.

Since then newspapers have revealed that new Royal Mail chief executive Rico Back - who is German and reported to be paid £640,000 some £100,000 more than his predecessor - will not be relocating to the UK from his Swiss home.

The Times speculates that dealing with this and other Royal Mail crises may prevent Long focussing on Countrywide’s rights issue in time for it to coincide with a trading statement which had previously been scheduled for this week - that statement, too, has now been delayed.

Countrywide has told Estate Agent Today it is not commenting officially on speculation about a rights issue.

Meanwhile investment consultancy Citigroup has given Purplebricks a boost by reaffirming its ‘buy’ rating and boosting its target price for the share.

Citi increased the target from 410p to 480p, which represents a rise of over 15 per cent. 

Following Purplebricks’ figures earlier this month - reporting an adjusted operating loss of £21.3m for the year ending April 30 as it spends to establish itself in the US and Australia as well as the UK - the investment consultancy Peel Hunt, which is linked to Purplebricks, cut its price target for the agency to 440p from 465p. 

Meanwhile the actual share price of Purplebricks yesterday remained around the 290p mark - well below its highest price this year of 460p back in January, which itself was lower than its all time high of around 500p this time last year.

This was despite the announcement of a consumer-focussed ‘Purplebricks Plus’ service to start next spring, and the expression of interest by Purplebricks chief executive Michael Bruce in the acquisition of overseas firms which would help the agency establish itself on mainland Europe in general and Germany in particular.