26th Apr 2018 17:01
LONDON (Alliance News) - Carpetright PLC said Thursday that it will not go into administration after creditors approved its company voluntary arrangement.
Creditors met Thursday to consider the CVA, and it was approved by a majority of more than 75% in value of the unsecured creditors of Carpetright.
A CVA is a procedure allowing a company with debt problems to reach a voluntary agreement with its creditors regarding repayment of its corporate debts over an agreed period of time.
Carpetright must now wait for shareholder approval at a meeting on April 30.
The embattled floorcoverings retailer also said that it will raise GBP60 million via an equity share placing and open offer, proceeds of which will be used to reduce debt and cover the costs of the company voluntary arrangement and resturcturing, expected May 18.
Carpetright, which has issued several profit warnings in past months, continues to expect to post a small underlying pretax loss for the year ending April 28. In financial 2017, the company recorded a pretax profit of GBP900,000.
The voluntary arrangement will not seek to compromise claims of any other creditors except for the landlords of 205 underperforming UK sites, the company said.
Chief Executive Officer Wilf Walsh said: "Addressing our legacy property issues to reduce our fixed costs to sustainable levels is critical to securing Carpetright's recovery. Receipt of creditor approval for the CVA proposal will enable us to take tough but necessary action to establish a right-sized estate of stores on economic rents, which is essential to restoring our profitability. Our focus now shifts to the forthcoming shareholder vote and to our preparations for the proposed equity financing which will recapitalise the business and enable Carpetright to address the competitive threat from a position of strength."
Carpetright shares closed up 2.6% Thursday at 39.00 pence each.
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