PurpleBricks aims to speed up sale process as payment provider withholds funds
Floundering online estate agent PurpleBricks is looking to find a buyer as soon as possible, despite the deals currently under discussion being well below today’s opening share price, after its payment provider started withholding funds.
The firm – which put up the ‘for sale’ sign after a February profit warning – said the number of properties it was instructed to sell did not grow as expected in the last three months. There were 5,672 instructions to sell during the quarter, barely over half the amount in the same period of the prior year.
This led to its payment provider for ‘pay now’ sales withholding funds.
With that loss of revenue, the business now has only £9.1 million in cash left, and no longer sees a path to be profitable again at the start of the next financial year. As a result, it is now aiming to speed up the sale process.
PurpleBricks’ agreement with its ‘pay later’ provider expired at the end of April, but it agreed a short-term extension of the partnership. However, it warned that its cash position would be in even more danger if it cannot work out a long-term deal.
PurpleBricks has engaged with “a significant number of potential offerors”, but so far the shareholder returns for all existing offers would be “materially below the company’s current share price” as of before market open this morning.
When it announced a sale, the PurpleBricks board said the main value of the business would be in its brand recognition, after strong marketing campaigns in past years.
Given the difficulties of finding a sale at the price that was hoped, the board will also look into a potential equity raise again. However, after failing to find much support for this earlier in the year, it said it was unlikely to find any interest this time around.
Shares plummeted by 54% to 2.5p today, suggesting a market capitalisation of £6.7 million. They are down 99.5% since a peak in 2017 that valued the business at £1.35 billion, at 498.5p per share.
