(Reuters) - UK’s Countrywide (CWD.L) said on Wednesday a deal to sell its commercial real estate consultancy business has been delayed, sending the debt-laden company’s shares lower.
The sale of Lambert Smith Hampton (LSH), which was agreed with Monaco-based entrepreneur John Bengt Moeller in November, would have fetched the British real estate agent 38 million pounds.
Countrywide said Moeller had failed to complete the deal by a March 1 deadline, adding that it was looking at legal options to claim costs from him for the delay and for the damages caused.
“The delay is a result of several regulatory compliance challenges, which are outside our control”, said Moeller, the founder of private commercial real estate investment firm Great Global Holdings, adding that he still wished to complete the deal.
However, Countrywide, which had net debt of 194.3 million pounds at June 30 or about twice the size of its market value, said it was in talks with another potential buyer for LSH.
Countrywide’s shares were down 5% by 1405 GMT, having fallen as much as 14.3%.
“They’ve got a bit of debt so I think it was quite an important disposal for them... they would be a little bit disappointed,” a London-based trader said.
The sale had already been delayed in February, with Countrywide saying that Moeller had been “indisposed” during January and also citing “logistical difficulties” relating to the transfer of funds to complete the deal.
The company, which vies for market share with Foxtons (FOXT.L), has been trying to recover from a botched 2015 restructuring that led to four profit warnings and a deeply discounted share issue.
Separately, Countrywide is in talks to merge with larger rival LSL Property Services (LSL.L) in a possible all-share deal.
The company, which runs 60 high street brands including Hamptons International, Bairstow Eves and Bridgfords, joined LSL in flagging a softening in the markets recently due to the coronavirus outbreak, adding it was too early to assess the impact.
But it said adjusted core earnings for 2019 will be above its expectations. Annual results are expected to be published later this month.
Reporting by Samantha Machado in Bengaluru, additional reporting by Yadarisa Shabong and Indranil Sarkar; Editing by Ramakrishnan M., Kirsten Donovan