Dreams seeks buyer or fundraiser to sleep easy

The main lender to Dreams, the embattled bed retailer, has sounded out potential investors over a fundraising or a buyer for the business.

Royal Bank of Scotland has contacted companies, such as private equity firms, over recent weeks to gauge their interest in the market leader Dreams, which has 270 stores.

Its founder Mike Clare sold Dreams to the private equity firm Exponent in 2008 in a deal worth more than £200m. But it has struggled as consumers cut back on big-ticket items.

But Exponent is also considering putting more capital into the business, which has debts of £32m. This would, in part, give the retailer more space on its banking covenants, as well as to invest further in the business.

Dreams's pre-tax profits fell by more than three-quarters to £4.4m for the year to 24 December 2010 on a turnover of £256.1m.