Carpetright’s biggest shareholder has bought the retailer’s debts and vowed to engage with the business to provide longer-term, stable funding.
Meditor will now control Carpetright’s revolving credit facility of £40.7 million, instead of previous lenders NatWest and AIB, although a day-to-day overdraft of £6.5 million with NatWest and Ulster Bank will remain.
Carpetright has been struggling with a huge debt pile for several years and was forced to turn to Meditor for two short-term loans last year.
The first in March was £12.5 million, with an arrangement fee of £1.9 million and 3% interest. The second – a £15 million loan in May – came with a £2.3 million fee and interest of 18%.
But on Tuesday the high street flooring specialist said debts have been falling following the sale of two properties in Amsterdam.
Bosses also played down suggestions that Meditor – a private investment vehicle controlled by former Old Mutual fund manager and poker player Talal Shakerchi – was trying to squeeze the business.
It added: “In connection with the arrangements, Meditor did not seek any assurances from the company, did not propose board representation and did not request structural changes in the business.”
Last year had been particularly hard for Carpetright, with a company voluntary agreement (CVA) insolvency process leading to creditors taking a hefty cut to their debts.
It also led to 80 stores closing and would see Carpetright pave the way for several retailers to use CVAs.
Earlier this year, the company revealed sales had taken a significant dent – down 13.4% to £386.4 million – with customers staying away over fears that the chain could collapse.
Pretax losses improved, however, from £69.8 million to £24.8 million.