Carpetright investor considers takeover offer

The retailer said it needs £80m to cover obligations and push ahead with its turnaround strategy. Talks have been held with Meditor, which owns Carpetright’s revolving credit facility and funds its overdraft, about a possible offer at 5p per share.

The revolving credit facility is due to expire on December 31, as are overdraft facilities provided by Natwest and Ulster Bank but funded by Meditor. An unsecured loan from Meditor expires next summer. Carpetright’s net debt is expected to increase to between £40m and £50m in December.

Carpetright looked at various long-term financing options including standard “high street” refinancing, asset-backed lending, strategic asset sales and equity financing before beginning talks with Meditor about a possible offer.

Although there is no certainty an offer will be made, Carpetright has received irrevocable undertakings in favour of the possible offer equating to 24% of its issued share capital, or 34.3% of the share capital not already held by Meditor. 

Carpetright reported that it is ”performing well despite the challenging economic backdrop and intense sector competition [and] group profitability is improving as the company drives store efficiency and reduces the central cost base”.

In the retailer’s first half, like-for-like sales growth was achieved in all territories. However, it warned: “The ongoing impact of negative consumer confidence and Brexit on the current retail environment could present a challenge in the balance of the financial year.”

Carpetright chair Bob Ivell said: ”Shareholders will be aware that we have been engaged in comprehensive refinancing discussions to replace existing facilities which expire at the end of this calendar year.

”The possible offer being announced today would put in place a new financing structure for Carpetright which would enable us to continue our recovery and make necessary investments in improving our business.”