Wednesday 18 September 2019

Carpetright gains a surer footing as chain's biggest investor takes on debts

Carpetright has been struggling with a huge debt pile for several years. Photo: PA
Carpetright has been struggling with a huge debt pile for several years. Photo: PA

Simon Neville

Carpetright's biggest shareholder has bought the retailer's debts and vowed to engage with it to provide longer-term, stable funding.

Meditor will now control Carpetright's revolving credit facility of £40.7m (€45m), instead of previous lenders NatWest and AIB, although a day-to-day overdraft of £6.5m with NatWest and Ulster Bank will remain.

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Carpetright has been struggling with a huge debt pile for several years and was forced to turn to Meditor for two short-term loans last year. The first in March was £12.5m, with an arrangement fee of £1.9m and 3pc interest.

The second, a £15m loan in May, came with a £2.3m fee and interest of 18pc.

But yesterday, the high street flooring specialist said debts had been falling following the sale of two properties in Amsterdam.

Bosses also played down suggestions that Meditor, a private investment vehicle, was trying to squeeze the business. Carpetright said: "Meditor has confirmed it now intends to engage with the company, with a view to providing a more stable and longer-term funding platform."

It added: "In connection with the arrangements, Meditor did not seek any assurances from the company, did not propose board representation and did not request structural changes in the business."

Last year had been particularly hard for Carpetright, with a company voluntary arrangement (CVA) insolvency process leading to creditors taking a hefty cut to their debts.

It led to 80 stores closing and would see Carpetright pave the way for several retailers to use CVAs.

Earlier this year, the company revealed sales had taken a significant dent - down 13.4pc to £386.4m - with customers staying away over fears that the chain could collapse. Pre-tax losses shrank, however, to £24.8m from £69.8m.

PA Media

Irish Independent

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