Carpetright shareholder buys up firm’s debts and gives its shares a much-needed boost

Carpetright shares rocket as biggest investor boosts confidence in the embattled flooring firm by taking on debt pile

  • Meditor has bought Carpetright’s revolving credit facility of £40.7million 
  • The seeming show of confidence sent Carpetright shares up over 10 per cent 

Shares in Carpetright shot up by over 10 per cent on Tuesday after its biggest shareholder, Meditor, bought up a chunk of the struggling retailer’s debts. 

Meditor has taken over Carpetright’s £40.7million revolving credit facility from previous lenders NatWest and AIB.  

The investor pledged to engage with the business to provide longer-term, stable funding, but Carpetright pointed out that Meditor ‘did not seek any assurances from the company, did not propose board representation and did not request structural changes in the business’. 

Shares in Carpetright ticked up by 10 per cent to 15p per share in early trading on Tuesday

The move has been broadly interpreted as a show of confidence. 

In his daily note, retail analyst Nick Bubb said: ‘The embattled Carpetright has not exactly been a great investment for the hedge fund Meditor, but it can see some sort of future for it, as Meditor is now starting to take control of Carpetright’s debt as well.’

Meditor is a private investment vehicle controlled by former Old Mutual fund manager Talal Shakerchi. 

Last year, the high street flooring specialist turned to the fund for two short-term loans, one for £12.5million and another for £15million.   

But it said today that its debts have fallen following the sale of two properties in Amsterdam. 

Carpetright is one of a number of retailers to have recently launched a restructuring process known as a Company Voluntary Arrangement (CVA)

Carpetright is one of a number of retailers to have recently launched a restructuring process known as a Company Voluntary Arrangement (CVA)

NatWest and Ulster bank will continue to provide Carpetright with a day-to-day overdraft of £6.5million.  

Carpetright is one of a number of retailers to have recently launched a restructuring process known as a Company Voluntary Arrangement (CVA) amid sharply falling sales. 

The retailer’s creditors gave it the green light to shut down around 80 of its underperfoming shops and agreed to slash its rent bill. 

The closures helped Carpetright stem its full-year losses, which shrunk from nearly £70million to £25million. 

Shares in the company topped 15p in early trading, but three years ago the stock sold for nearly £1 a share.  

Google chart tracks the decline in Carpetright's share price over the last five years

Google chart tracks the decline in Carpetright’s share price over the last five years

 



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