Yahoo Finance Carpetright kick-starts £60m share placing to bankroll restructuring
Struggling retailer Carpetright has launched a £60m fundraising to help rescue the business from its precarious financial position.
The flooring-to-beds company has issued a slew of new shares at 28p each, marking a 16pc discount on its closing share price of 33.25p on May 17.
The share sale will be used to bankroll the firm’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 move, sending shares up 9pc to 36.26p in the early trade.
It comes after Carpetright put 300 jobs at risk last month when it announced plans to close 81 stores.
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.
He added: “As well as funding implementation of the CVA to create a right-sized 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 squeezed margins.
