Countrywide silent on why due diligence didn’t spot sale problem

Countrywide is declining to explain why due diligence on the sale of its commercial arm did not catch a problem which has led to a delay on the deal.

Estate Agent Today has asked Countrywide about the delay to the £38m sale of Lambert Smith Hampton - to a Monaco-based real estate entrepreneur, John Bengt Moeller. The deal was scheduled for completion at the end of December but a delay was announced in a statement to shareholders on Friday. 

The statement said the buyer was “indisposed during January” and unable to access the funds and since that announcement the share price has slipped around five per cent.  

We asked, firstly, why Countrywide’s due diligence process didn’t discover there was an apparent difficulty in the buyer being able to “access” his funds; and secondly what was the nature of the problem which led to the buyer being “indisposed in January”.  

A spokesperson for the agency told us yesterday evening: “Countrywide will not comment on the nature or extent of its due diligence on this or any transaction. The company will also not expand on the reasons for the purchaser being indisposed in January.”

Countrywide organised a special general meeting on December 27 to allow shareholders to approve the sale as it was considered critical that the deal be concluded by the end of 2019.

The shareholders backed the sell off with 99.97 per cent in support; a company statement afterwards suggested the sale could be completed on December 31, meeting the end-of-year deadline.

Therefore EAT asked two further questions of Countrywide - what are the consequences of the payment for the deal not meeting the end-of-year deadline? and is a new deadline for completion of the deal?

The Countrywide spokesman told us last evening: “The sale of LSH acts to further deleverage the group and it remains the company’s intention to sell the business. In the meantime, it will continue to operate within its agreed financial arrangements. In terms of timing, I draw your attention to the section from the RNS [trading statement last Friday]: ‘We have been re-assured by Mr Moeller that completion is imminent’.”