Bosses at Carpetright have formally agreed terms to sell the business to its biggest shareholder Meditor in a deal that values the floor specialist at £15.2 million.
Shareholders will receive just 5p-a-share, having been at 35p in April, although many will be pleased to not see the company collapse into administration.
Carpetright first revealed last month it was in talks with Meditor – run by poker-playing hedge funder Talal Shakerchi – last month.
The retailer has debts of about £56 million, and has said it needs about £80 million to both pay off debts and give it sufficient cash to grow the business.
Bob Ivell, chairman of Carpetright, said: “We believe the offer is in the best interests of all stakeholders.
“While we have made significant progress with our recovery plan for the Carpetright Group, our ability to invest in the future of the business has been constrained against the backdrop of limiting banking covenants and a very challenging consumer market.”
Mr Shakerchi of Meditor added: “With Meditor’s support and financial backing and without the constraints of a public market listing, Carpetright will be well positioned to compete more effectively.
“This will facilitate substantially increased investment in Carpetright’s committed employees and its store estate as well as driving new initiatives and improvements.”
The deal will now go to shareholders for a final vote, however, it is expected to pass with other investors already saying they will back the proposals.
Investec Asset Management previously said it planned to throw its more than 11.3 million shares behind the bid, which has garnered support from shareholders with 27.7% of the total, or 84.3 million shares.
At the time the potential offer was announced, Carpetright said it had won tentative or solid approval for the offer from Aberforth Partners, which owns 12.6% of its shares, Majedie Asset Management, which holds 6.6%, Countywide Developments, with 2.2%, and Soros Fund Management, which owns 2.6%.
Meditor became one of Carpetright’s lenders in September when it took over a pile of current and potential loans from NatWest and AIB.