Carpetright has secured the £60m it needs to fund its CVA and restructuring costs via a share issue.
The beleaguered business said its placing of 232.5m new shares at 28p per share was 92% subscribed. It said the balance of the remaining stock will be taken up after the placing, which is due to take place on Friday.
Carpetright issued the shares in a bid to support its company voluntary arrangement (CVA) as it grapples to right-size its store estate and reduce rents.
Of the £60m, £6m will be used to cover the costs of the CVA, £12.5m will be used as the repayment of the principal amount of the short-term unsecured loan from Meditor agreed in March, and £33m will fund the retailer’s new investment plans. The remainder will fund the business’s ongoing working capital requirements.
The retailer’s creditors approved its CVA in April. Carpetright management hope that shedding 92 stores of its 418-strong estate and cutting the rents on another 113, along with increased investment in its proposition, will allow it to survive intense market competition from rival Tapi and the current consumer downturn.