Carpetright faces crunch creditor vote on store closure plans
The chain has earmarked 81 stores for closure as part of a restructuring.
The fate of 300 Carpetright workers will be decided on Thursday when creditors to the stricken retailer vote on a radical store closure programme.
Carpetright has earmarked 81 stores for closure as part of a Company Voluntary Arrangement (CVA), which allows firms to shut loss-making outlets and secure rent reductions.
Earlier this month the chain said 92 sites were in the firing line, although 11 have already stopped trading, with rent on another 113 set to be slashed as part of the restructure.
The retailer has been hit by poor trading and is in “technical breach” of its banking arrangements, but the group said it was taking action to address this and ensure it is amended for the future.
Carpetright has 409 UK shops overall and employs nearly 2,700 staff.
If the CVA is to succeed, Carpetright would need the backing of 75% of creditors, which include landlords.
The result of the vote is expected to be announced later today.
Shareholders in the listed firm will also vote on the CVA on April 30, but the creditor vote will take precedence in the event there is a discrepancy.
When it first announced the CVA, which is being handled by Deloitte, Carpetright said it would help it to “address the competitive threat from a position of strength”.
Carpetright is also attempting to raise around £60 million through a rights issue to put the company on a firmer financial footing.
The group expects to post a small underlying loss for the year to April 28.
The vote will come days after Carpetright’s biggest shareholder, Meditor Capital Management, increased its stake in the business.
Meditor upped its stake in Carpetright from 16.5% to 29.99% on Monday, just shy of the threshold at which it would have to make a formal takeover bid for the retailer.
Meanwhile, another major shareholder, Franklin Templeton, reduced its holding from 16% to 1.7%.
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.