Carpetright clinches £15m in emergency funding
The unsecured loan comes with an interest rate of 18% per year.
Carpetright has clinched emergency funding worth £15 million to plug a cash shortfall, just weeks after earmarking dozens of stores for closure.
The embattled retailer obtained an unsecured loan from “substantial shareholder” Meditor European Master Fund.
It comes with an interest rate of 18% per year, which will compound monthly and will be paid in a lump sum at the end of the loan’s term.
A repayment date has been set for July 31 2020.
The loan is meant to help the company with short-term working capital requirements.
It comes after Carpetright gained investor approval for a Company Voluntary Arrangement (CVA), a process that will allow it to shut loss-making outlets and secure rent reductions.
Carpetright has earmarked 81 stores for closure as part of the restructure, with rent on another 113 set to be slashed as part of the plan.
A total of 300 jobs are at risk as a result of the CVA.
Meditor also provided an unsecured loan to Carpetright worth £12.5 million in March, which is expected to be repaid through the proceeds of its pending equity fundraising.
Carpetright is attempting to raise around £60 million through a rights issue later this month to put the company on a firmer financial footing
Its shares were down 0.5% in morning trading.
Last month, the company said was expecting to book a full-year underlying pre-tax loss of between £7 million and £9 million, compared with a £14.4 million profit last year.
The group also bemoaned difficult trading in the final quarter, which saw like-for-like sales plummet 10.5%. For the full year, comparable sales dipped 3.6%.
The retail sector has already seen thousands of jobs axed following the collapse of well-known names Toys R Us and Maplin.
High street retailers have been hit by a drop in consumer spending, soaring costs and the increasing threat of online competitors.