Troubled Carpetright scrambles to secure emergency funds
The retailer is seeking at least 拢10m in short-term funding as it plots a sweeping store closure plan, Sky News learns.
Wednesday 21 March 2018 02:28, UK
Carpetright is racing to secure emergency funding to pave the way for a longer-term restructuring plan in the latest sign of the crisis engulfing Britain's high streets.
Sky News has learnt that the flooring chain, which trades from more than 400 shops across the country, was working on Tuesday night to secure more than £10m from prospective lenders.
The talks could result in an agreement about new funding being announced as early as Wednesday, according to sources close to the situation.
However, it was unclear what the consequences of a failure to attract the new money would be, with people close to Carpetright playing down the possibility of it heading for administration.
Carpetright's hunt for financing comes less than three weeks after it said it was likely to report a loss for the year ending April 28.
Last week, it was reported that the retailer was contemplating the closure of scores of stores under a mechanism called a Company Voluntary Arrangement (CVA).
The use of CVAs has become increasingly prevalent in recent months as retailers and other high street chains have sought to accelerate their restructuring efforts.
On Wednesday, New Look's creditors will vote on a proposal enabling it to close 60 shops and slash rents at many of its other outlets.
The restaurant chain Prezzo will also hold a CVA vote this week, while Toys R Us UK and Byron have also unveiled similar blueprints in the last three months.
While creditors have tended to back such proposals by troubled high street players, CVAs have proved to be no guarantee of future success.
Toys R Us UK collapsed into administration earlier this month, despite it having secured support from landlords and the Pension Protection Fund for a CVA just days before Christmas.
The electricals chain Maplin also plunged into administration, with the collapse of both chains threatening approximately 5,500 jobs.
The weakening performance of Carpetright has left it nursing a market capitalisation of just £30m.
Its UK sales have been dented by competition from Tapi, a flooring chain launched in 2015 by the son of Lord Harris, Carpetright's founder.
People close to Carpetright dismissed market rumours that the Harris family could contribute to the emergency funding being sought by the company this week.
In addition to its UK store estate, it also has more than 130 shops in several European markets. It employs 2,700 people in the UK.
A Carpetright spokesman declined to comment on Tuesday night.