Countrywide bosses blasted over ‘unequal’ rescue plan

Countrywide is under fire again over the controversial rescue plan it announced last week.

On Friday the troubled agency group’s share price - which fell over 60 per cent the previous day, when the plan was announced - slipped yet another 13 per cent to close at a mere 16p. 

On top of that the weekend business press and online financial analysts have not been keen on the plan.

The Sunday Times’ Inside The City column was particularly scathing of the way Countrywide has gone about its £140m cash call.

“The placing looks suspiciously like it was tailored to favour dominant shareholder Oaktree Capital Management and two as-yet undisclosed new blue chip investors” says Sunday Times writer Sabah Meddings.

She claims Countrywide’s placing - which is a subtly different kind of fundraising to a rights issue - “doesn’t quite add up” because small scale investors have significantly less favourable terms than big institutions. An exception is made for the company’s directors who are given the more favourable terms, Meddings says, adding that they “missed the memo about being all in it together”.

Her comments end with the statement: “For small investors, Countrywide’s iniquitous cash call leaves a bitter taste.”

On top of that the respected Morningstar online business analysis service says of the cash call that “it was so obvious that disaster was looming” and described the measure as “a nasty fund raising.”

The call enjoys a heavy 80 per cent discount of 10p and Morningstar says “those who are still in might as well take up their rights - at least the pain will be a much-needed lesson” but adds that “sensible souls will stay well clear.”

The scale of the company’s slump in fortunes and status - adding to wider concern over the estate agency sector following poor figures from Foxtons recently - led to the Mail on Sunday saying that this storm “could spell disaster for agents that focus on middle-market sales”, especially given the growing competition from online operators. 

Meanwhile Countrywide itself has released a timetable for itd call for additional funds.

Applications to invest must be received by 11am on August 17; the result of the call will take place on August 21; a general meeting required to ratify the result will be held on August 28 and, if the call is successful, the new shares will begin dealing on the London Stock Exchange on August 30.