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Foxtons in talks with banks to re-finance debt

Bank of America and the Japanese bank Mizuho are understood to be waiting for the business's first quarter results before deciding whether or not to take control after the private equity company that owns the chain said it will not put more cash into the business right now.

Indeed BC Partners, which bought Foxtons for £360 million in May 2007, before the property crash, has now admitted the purchase was a mistake and it will not try to rescue the business unless lenders agree to write off £260 million of debt.

'As housing markets fall, so do estate agents, so we got that wrong. In hindsight we made the wrong assessment of the market,' said Andrew Newington, a BC partner.

But he believes the estate agency does have a future. 'If we are lucky enough to see a recovery in the London property market, this business will come roaring back,' he predicted. BC Partners will continue to manage the business and talk with the banks.

Foxtons, one of London's biggest estate agents, hit the headlines with its fleet of branded green and yellow Mini cars, its flashy cafe-style offices and its bullish, aggressive approach.

When BC bought the company and secured the terms of its financing, it had provisioned for a fall of up to 30% in house sales. But the property crash of 2008 with its 60 to 70% collapse in London property prices meant this forecast was inadequate.

Foxtons is not the only UK estate agency dependent on a private equity firm. Countrywide, the UK's largest chain, was bought by US private equity firm Apollo, at around the same time, in April 2007.