old

Flooring market leader Carpetright has agreed a short-term loan with one of its shareholders ahead of a plan to raise new capital and cut store numbers via a CVA.


The UK's largest carpets and flooring retailer has announced an unsecured £12.5 million facility with Meditor European Master Fund, one of its largest shareholders.


The loan, which will be used for short-term working capital, is due to be repaid by the end of August with Carpetright saying it is working on the feasibility of a Company Voluntary Arrangement (CVA) that would see it exit an unspecified number of "poor performing" stores.


"The aggressive store opening strategy pursued by the company’s previous leadership has left Carpetright burdened with an oversized property estate consisting of too many poorly located stores on rents which are simply unsustainable," said CEO Wilf Walsh.


If the CVA goes ahead, Carpetright intends to raise between £40 million and £60 million through an equity issue, it said. The proceeds of the equity issue would be used to fund its ongoing strategy, reduce indebtedness and cover the costs associated with the CVA.


"I am pleased that we have secured this additional support from one of our major shareholders as we continue to explore the feasibility of a CVA and a conditional equity issue. These further cash resources will enable us to make the necessary decisions free from short-term funding pressure.


"In the interim, it is very much business as usual for all of our stores and we look forward to serving customers through the important Easter trading period."

To Read The Full Story: