...By Henry George for TDPel Media.
PurpleBricks, which recently put up the ‘for sale’ sign after a profit warning in February, has said that it had fewer properties to sell than expected over the last three months.
It instructed only 5,672 sales during the quarter, which is just over half the amount in the same period in the previous year.
This led to the withholding of funds by the payment provider for ‘pay now’ sales.
The company now has only £9.1 million in cash remaining and no longer sees a path to profitability at the start of the next financial year.
Therefore, it is now seeking to speed up the sale process.
Payment provider withholding funds
The loss of revenue caused by the payment provider withholding funds has left PurpleBricks with only £9.1 million in cash.
The company is now in a precarious financial position, and it no longer sees a path to profitability at the start of the next financial year.
As a result, the company is seeking to speed up the sale process.
Potential offers and equity raise
PurpleBricks has engaged with “a significant number of potential offerors.”
However, none of the existing offers would provide shareholder returns that match the company’s current share price.
Given the difficulties of finding a sale at the hoped-for price, the board is also considering a potential equity raise.
However, it is unlikely to find any interest this time around, as it failed to find much support for this earlier in the year.
Share prices
Shares in PurpleBricks plummeted by 54% to 2.5p today, indicating a market capitalisation of £6.7 million.
Since its peak in 2017, when it was valued at £1.35 billion at 498.5p per share, its shares have declined by 99.5%.
Difficulties in finding a buyer
PurpleBricks’ board said that the main value of the business would be in its brand recognition, which had been built up over the years through strong marketing campaigns.
Despite this, it has faced difficulties in finding a buyer at the price it hoped for.
As a result, the company is now considering an equity raise, although it is unlikely to be successful.
