Foxtons to raise £22m after lockdown hits business

Foxtons set out plans to raise £22m as the estate agent chain reported a near halving of commissions since the government's Covid-19 lockdown started.

The company said it intended to issue shares representing about 19.9% of its existing ordinary share capital at 40p a share. The price is about 4.2% higher than Foxton's 38.4p closing price on 16 April.

Foxtons said its £21.9m cash position at the end of March was relatively strong but that if could face a liquidity crunch if the property market was shut down until the end of August.

It said under this "reasonable worst-case scenario" second- and third-quarter revenue would fall by 78% with a slow recovery in the London market by April 2021. In a trading update Foxtons said in the three weeks since the government lockdown sales commissions were 47% lower than a year earlier.

"Although the company's relatively strong net cash position is sufficient to support its current operations in a number of scenarios, it could potentially face a liquidity gap in the event of a reasonable worst case scenario," Foxtons said.

The company said it would place the shares with investors on a non-preemptive basis immediately on Friday through an accelerated bookbuild. Foxtons said it had consulted with a significant number of its large shareholders about the placing, which will not give existing investors first refusal.

Foxtons said this method, which shareholders usually frown upon, would be quicker and cheaper than a rights issue at "an important and unprecedented time for Foxtons".