By Samantha Machado
(Reuters) - UK property agency Foxtons (L:FOXT) issued new shares and furloughed about 750 of its employees on Friday after the country's lockdown threw the housing market into a deep freeze, leaving companies short of cash.
Foxtons said it placed new shares worth 20% of its existing capital at 40 pence a piece, representing a premium of 4.2% to Thursday's close of 38.40 pence, as it seeks to raise up to 22 million pounds ($28 million).
That boosted the company's share price, which surged 15.9% to 44.5 pence by 1217 GMT, after falling 54% since the start of this year.
Foxtons also said that all its executive directors and non-executive directors had agreed to a 20% reduction in base pay and fees, respectively for April and May.
Britain's estate agents, already in a year-long slump, are severely strapped for cash amidst the coronavirus crisis, with property viewings halted and offices closed to the public as part of wide-ranging measures to reduce COVID-19 infections.
Foxtons is the latest UK company to tap the market for funds since the crisis began, following online fashion retailer ASOS (L:ASOS) and WH Smith (L:SMWH) among others.
"The London property market has been severely disrupted by the necessary measures the country has taken to contain the Covid-19 pandemic," Foxtons' Chief Executive Nic Budden said.
"(The) board considers it prudent to raise additional capital at this time to enable the company to maintain liquidity in a reasonable worst-case scenario."
The London-based company said net proceeds from the placement will be used to repay the revolving credit facility and to provide sufficient liquidity to battle the impact of the pandemic.
Foxtons, which rivals Countrywide (L:CWD), also said commissions it earned in the first three weeks of the UK lockdown were down 47% compared to the same period last year. The lockdown has only been in place for three weeks.
Foxtons reported a 5% fall in lettings revenue in January-March to 13.9 million pounds.
The impact of a ban on tenant fees for lettings, introduced as part of measures to ease the financial hardship of the coronavirus crisis, was 0.8 million pounds, Foxtons said without elaborating.
As of March 31, it said it had a cash balance of 21.9 million pounds, including the fully drawn revolving credit facility of 5.0 million pounds.