The chairman of online estate agent Purplebricks has been urged to resign after the market valuation of the firm shrank from £240million to just £45million.
Shares in in the disrupter firm have fallen 85% since it listed on Aim in 2015, after a series of profit warnings and operational errors.
This morning, The Times reports that an activist investor which has built a 4% stake in the company has called on the chairman, Paul Pindar, to resign.
Lecram Holdings, the investment vehicle of Adam Smith, says that “urgent action is now essential” to restore the credibility of the company with investors”.
The letter urges Pindar to step aside in favour of a “replacement with necessary experience and skills to address urgently the company’s continuing cash burn and operating performance within the residential estate agency sector”.
A Purplebricks spokesman said: “We sought to meet with Lecram Holdings to discuss their concerns. They declined. It’s disappointing that they chose to go to the media instead rather than engage with us.”
He added that the chief executive, Helena Marston, would be setting out plans in detail as part of the company’s results announcement in early August.
The results have been delayed because its auditor needs more time to assess the new processes and controls that the online estate agent brought in last year after uncovering problems in its lettings division.
The new procedures have been triggered in part by it having to set aside millions as a result of failing to follow lettings sector legislation to protect tenants’ deposits.
Back in January - after the lettings mistake was first revealed - Purplebricks claimed it would cost the company some £3.6million to correct the compliance issues in its rentals division.
However, some newspapers and industry commentators suggested it could cost considerably more. The Daily Telegraph suggested last year that the bill could be as high as £30million.
FTSE 100
The UK's top share index, the FTSE 100, was down 72 points at 7,123 shortly after opening this morning, following Friday's seven-point gain.
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