Carpetright considers sale
Carpetright has entered discussions with debt- and shareholder Meditor European Master Fund regarding a possible takeover.
Meditor has made a ‘possible offer’ to acquire all the retailer’s shares, which will enable the conversion of the majority of its debt to equity, equipping Carpetright with the necessary balance sheet to pursue growth.
Carpetright requires approximately £80m to repay its debts, meet ongoing working capital requirements and provide the necessary growth capital. The company says it explored various long-term financing solutions before opening discussions with Meditor, and has indicated that it would pay 5p per share in cash.
Meditor’s offer remains uncertain, but it must confirm its intent by 28th November.
Carpetright’s strategy is focused on several key areas: IT infrastructure upgrades; new partnerships, such as its concession plan with Furniture Village; continued optimisation of its store estate; and investment in its operations in the Netherlands, Belgium and Republic of Ireland.
Subject to a successful takeover, Carpetright says it would invest £20-25m in the short-term in store refurbishment, staff training, its digital platform, marketing, and its operations in Europe.
In H1 FY20, Carpetright says LFL sales growth was achieved in all territories, average sales per store ratios improved, and a prolonged sales decline started to bottom out – yet the retailer remains cautious.
Carpetright’s chairman, Bob Ivell, says: “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.”