Flooring retailer Carpetright has launched a rescue plan as it sells off equity and plans to launch a company voluntary agreement (CVA).
Following speculation earlier this week, the struggling retailer announced that it is seeking to secure an insolvency deal allowing it to continue trading while it negotiated rent reductions and debt restructures.
The CVA would lead to dozens of closures of loss making stores, with its chief executive admitting: “The aggressive store opening strategy pursued by the company’s previous leadership has left Carpetright burdened with an oversized property estate consisting of too many poorly located stores on rents which are simply unsustainable.”
Alongside considering a CVA, it has also begun to sell off equity in order to raise funds of between £40 million to £60 million.
One of its shareholders Meditor has already pledged £12.5 million to aid the company in the short term.
This follows a string of dismal results and profit warnings from the retailer, stating earlier this month in its second profit warning in as many months that it was in talks with lenders.
In January its share price dropped 47 per cent as it reported a 3.6 per cent drop in sales over the crucial Christmas period, after reported a further 93 per cent drop in profits a month prior.