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Wednesday 24 October 2018

Hedge fund hikes stake in Carpetright ahead of vote on store closures

Meditor Capital Management’s holding is close to the threshold at which is must make a takeover offer.

Carpetright's landlords will vote on a rescue deal for the retailer (PA)
Carpetright's landlords will vote on a rescue deal for the retailer (PA)

By Helen Cahill, Press Association City Reporter

Carpetright’s biggest shareholder, Meditor Capital Management, has increased its stake in the business days before creditors vote on a rescue plan for the firm.

Meditor upped its stake in Carpetright from 16.5% to 29.99% on Monday, just shy of the threshold at which it would have to make a formal takeover bid for the retailer.

Meanwhile, another major shareholder, Franklin Templeton, reduced its holding from 16% to 1.7%.

Hedge fund Meditor agreed to support Carpetright in March when it made a £12.5 million loan to the company in exchange for new shares.

On Thursday, Carpetright’s landlords and creditors will vote on a rescue deal that could lead to the closure of 81 stores and the loss of around 300 jobs.

Under its Company Voluntary Agreement (CVA) – which is a form of insolvency aimed at protecting a business from going bust by cutting its costs – Carpetright will also be able to cut rents on a further 113 stores.

Other household names including New Look and Byron have pushed through CVAs following a squeeze on consumer spending.

Department store House of Fraser is also exploring a CVA proposal.

Carpetright – which employs nearly 2,700 staff in total – has also confirmed an investor cash-call to raise around £60 million through a rights issue to put the company on a firmer financial footing.

Carpetright declined to comment.

Press Association

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