(Alliance News) - Carpetright PLC on Friday said it agreed to a takeover offer from Meditor Holdings Ltd, which values the retailer at GBP15.2 million.
Meditor already owns just shy 30% of the firm, and holders of the remaining Carpetright stock will receive 5 pence per share.
Carpetright was trading 15% higher at 4.86p in London on Friday morning.
The high street chain said the takeover bid has been backed by shareholders with 43% of Carpetright shares not currently held by Meditor, meaning 30.3%. Together with Meditor's existing 29.9% stake, that means ownership or acceptances for 60.2% of Carpetright shares. The offer requires 75% acceptances.
Chair Bob Ivell said: "We believe the Meditor offer is in the best interests of all stakeholders. While we have made significant progress with our recovery plan for the Carpetright group, our ability to invest in the future of the business has been constrained against the backdrop of limiting banking covenants and a very challenging consumer market.
"With a recapitalised business and the backing of a committed new owner with the resources to invest in Carpetright for the long term, we will be able to complete our recovery in the private arena and emerge as a stronger business."
Carpetright said that failing consumer confidence following the Brexit vote back in 2016 has impacted trading.
For the financial year ended April 27, revenue fell by 13% year-on-year to GBP386.4 million from GBP446.3 million, with like-for-like sales in the UK down 9.1%.
The company also said it needs an GBP80 million cash injection to pay its borrowings, net debt stands at GBP27 million, meet its working capital needs and execute its "growth strategy".
"Prior to and concurrent with discussions with Meditor Fund, Carpetright has actively explored various other long-term financing solutions including standard 'high street' refinancing, asset-backed lending, strategic asset sales and equity financing. Having investigated these options thoroughly, the board believes that none of these solutions would be able to deliver the long-term funding required by Carpetright," the company said.
"Consequently, the board believes that the offer from MHL is the only viable route to deliver its requirements for a deliverable, controllable solution to the long-term funding required to make Carpetright a sustainable business."
By Eric Cunha; ericcunha@alliancenews.com
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