Carpetright reveals plans to raise £60m to fund recovery as 92 stores face closure

The money raised will go towards funding the CVA as well as paying back loans

The company recently announced a raft of store closures (Reuters)

Carpetright has announced a £60m fundraising with the aim of using the proceeds to restructure the struggling company.

Shares in the group rose 11 per cent in early trading after it set out the details of the fundraising, which will see 232,463,221 new ordinary shares issued at a price of 28p per share.

The group recently announced plans to close 92 stores in the UK, putting 300 jobs at risk, as part of a company voluntary arrangement (CVA) that will allow the business to continue operating while it deals with debt problems.

On Friday, Carpetright said the £60m raised through the share placing would be divided up as follows: £6m to cover the costs of implementing the CVA; £12.5m for replaying a loan from shareholder Meditor; £33m to fund spending under the firm’s revised business plan; and the remainder will go towards ongoing working capital requirements.

Carpetright’s chief executive, Wilf Walsh, said the company had received “strong support” from investors for the fundraising.

“The £60m proceeds from the placing and open offer will give us the resources we need to complete our restructuring and accelerate our recovery plan,” he said.

“As well as funding implementation of the CVA to create a right-sized estate of stores on sustainable rents, it will provide the necessary capital to refurbish and modernise the ongoing store estate and to upgrade our digital platform – both vital investments in our future. We believe that a recapitalised market leader will ultimately be better for customers, suppliers, landlords and shareholders.”