// Carpetright in talks with Meditor about potential sale
// The retailer’s biggest shareholder wants to buy the company to avoid its collapse
Carpetright is in talks about a potential sale to its biggest shareholder Meditor, as it finds ways to repay debt.
Meditor has offered to buy the carpet and DIY retailer to avoid the company collapsing due to debt.
Carpetright said it needs £80 million to drive its turnaround strategy, and has been in talks with Meditor, which owns the retailer’s revolving credit facility, about a possible offer at 5p per share – valuing the business at £15.2 million.
READ MORE: Carpetright debt gobbled up by major shareholder
The revolving credit facility is due to expire on December 31. There is currently no certainty an offer will be made.
Carpetright’s net debt is set to increase to between £40 million and £50 million in December.
Carpetright said it is ”performing well despite the challenging economic backdrop and intense sector competition and group profitability is improving as the company drives store efficiency and reduces the central cost base”.
The retailer warned on “the ongoing impact of negative consumer confidence and Brexit on the current retail environment” which could present a challenge in the balance of the financial year.
In late August, Meditor took control Carpetright’s revolving credit facility of £40.7 million, instead of previous lenders NatWest and AIB.
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.
”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,” Carpetright chairman Bob Ivell said.
”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.”
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