Carpetright has officially announced the start of its £60 million emergency fundraising drive as part of its restructuring plan to prevent it from going under.
The move is understood to have “strong support” from shareholders and investors, but is still dependent on approval at its annual general meeting.
It will offer 232.5 million new shares at 28p each, around a 16 per cent discount on the shares’ closing price on Thursday.
Of the proceeds, £6 million will fund the “implementation of the CVA”, in which the embattled retailer plans to shutter around 81 stores and slash rent prices on others.
Roughly half the cash is understood to be earmarked for capital expenditures, while the rest will go towards restructuring its debt.
It will also allow Carpetright to pay off its loans granted to it by private investment firm and its biggest shareholder Meditor.
Last week it handed the retailer £15 million in emergency funding, following a previous £12.5 million loan which has a repayment date of 31, 2020, with an interest rate of 18 per cent which will compound monthly and will be paid in a lump sum at the end of the loan’s term.
“We are delighted to have received such strong support from our shareholders and other investors in achieving this fully underwritten fundraise,” chief executive Wilf Walsh said.
“The £60 million proceeds from the placing and open offer will give us the resources we need to complete our restructuring and accelerate our recovery plan.
“As well as funding implementation of the CVA to create a right-sized estate of stores on sustainable rents, it will provide the necessary capital to refurbish and modernise the ongoing store estate and to upgrade our digital platform – both vital investments in our future.
“We believe that a recapitalised market leader will ultimately be better for customers, suppliers, landlords and shareholders.”