Carpetright has announced it is in talks with its largest investor Meditor over a potential sale of the business, as it seeks a way to pay its debt facilities.
Meditor, which currently has a 30% stake in the business has made an offer of 5p per share for the business, valuing it below its current market value at around £15.2m. Shares in Carpetright closed at around 9p per share on Wednesday.
Carpetright said that approximately £80m is needed to repay its debt facilities; meet its ongoing working capital requirements; and to provide the company with growth capital.
The board of Carpetright added it believes the company is “performing well despite the challenging economic backdrop and intense sector competition”.
It said the group’s profitability is “improving” as the company drives store efficiency and reduces the central cost base.
Bob Ivell, chairman of Carpetright, said: “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.
“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.”