Carpetright rolls out £60m fundraising to implement overhaul
STRUGGLING retailer Carpetright has launched a £60m fundraising to help rescue the business from its precarious financial position.
The flooring-to-beds company plans to increase its share capital by more than 76pc, issuing new shares at 28p each in a fully underwritten placing and open offer that will be used to bankroll the company’s costly overhaul plans.
These include £6m for restructuring its store estate, £12.5m to pay off an unsecured loan from major shareholder Meditor, and £33m for capital investment.
Investors welcomed the plans, sending the shares up 26.7pc, or 7.7p, to 37p yesterday, giving them a theoretical post-placing price of about 30p.
Current shareholders can subscribe to the open offer on the basis of 88 new shares for every 27 held.
The fundraising, which needs approval of shareholders at a general meeting next month, comes after Carpetright announced plans to close 81 stores last month, putting 300 jobs at risk. It is pushing through the change as part of a company voluntary arrangement (CVA), which allows firms to shut loss-making sites and secure deep discounts on rents.
Chief executive Wilf Walsh said the company was “delighted” with the strong support from shareholders for the fundraising.
He added: “As well as funding implementation of the CVA to create a rightsized estate of stores on sustainable rents, it will provide the necessary capital to refurbish and modernise the ongoing store estate and to upgrade our digital platform – both vital investments in our future.”
While the fundraising will settle one debt with Meditor, Carpetright still has an outstanding high-interest loan with the shareholder worth £15m. The bitter weather at the start of the year has piled more pressure on the retail sector, which is already struggling with waning consumer confidence, the shift to online and escalating costs.
Hikes to the National Living Wage, inflation and rising taxes sparked by last year’s business rates revaluation have also squeezed margins.