Countrywide has agreed a sale of its commercial property business as the troubled estate agency group battles to reduce its debt burden.
Countrywide said on Friday it would sell Lambert Smith Hampton, its commercial property agency, to the Monaco-based property developer John Bengt Moeller for £38m.
That will help the group reduce its net debt by £34.4m, Countrywide said, as it seeks to bring borrowing back to sustainable levels after it was forced to hold an emergency share placing last year.
Net debt at the end of June, its last reported figure, was £90m. The company — which owns brands such as Hamptons International, Chappell & Matthews and Bairstow Eves — currently has a market capitalisation of £88m and says it wants to bring its leverage ratio down to 1:1 “in the medium term”.
It said it had agreed an amended credit facility with its lenders this week, which “provides the group with the financial flexibility to execute the turnround plan while operating in what continues to be a challenging and uncertain market environment”.
Peter Long, executive chairman, said: “The sale of the Lambert Smith Hampton commercial business strengthens the group. Once completed, we believe that the group will be in a more advantageous position in our core residential market.”
He said full-year results would be in line with expectations. The sale will complete on December 31, subject to shareholder approval.
Shares in the group rose almost 15 per cent to 5.4p in early trading on news of the deal.
Mr Bengt Moeller was a founding partner of the German real estate group Hanseatic Holding, and now runs the London-based investment manager MSS Real Estate, according to his profile on LinkedIn.
Countrywide is also looking to consolidate its shares on a ratio of 50 to 1, subject to shareholder approval.