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Foxtons blast into a Happier New Year
publication date: Jan 11, 2010
Foxtons has hit the New Year with all guns blazing with a survival deal with the banks and an appeal against the court ruling on their tussle with the OFT.
BC Partners, Foxtons’ owner will inject a further £50 million to remain the single largest shareholder, in a deal with their original backers, Bank of America Merrill Lynch and Mizuho, who jointly lent £260 million back in 2007.
Key to the deal was an agreement with Jon Hunt, the founder of Foxtons who sold out to BC for over £300 million. Jon Hunt has agreed to waive the £50 million still owed to him by the company. This concession made the restructuring deal possible, along with a further £140 million in loans from the banks in return for most of the company’s equity.
Jon Hunt shouldn’t feel the pinch too much, in the Sunday Times Rich List last year his wealth was estimated at £660 million.
The second prong of Foxton’s survive and prosper plan was announced on Christmas Eve, with a plan to appeal against a High Court ruling on unfair charges to landlords. If successful, this could have a very positive impact on the company’s financial position.
Their decision to appeal came after the Supreme Court’s ruling on bank charges, which stated that banks did not need to repay overdraft charges as they were not, in fact, illegal.
A Foxtons’ spokesman said that this has set a precedent for contract terms, “The judge in the Foxtons test case followed the law as it then was. However, since then, the Supreme Court in the bank charges case has significantly altered the way in which the courts are to approach the unfair terms regulations.”
If they win their appeal they will have a strong defence to any future claims by landlords hoping to recover renewal commissions. The appeal must be lodged by 29 January.