Walsh to speed up turnaround plan as Carpetright share issue is fully underwritten
Carpetright has said its CVA will save it £19m a year and its fully underwritten share placing will allow it to accelerate the turnaround of the retailer.
The group will issue 232,463,221 shares: 325.9% of the existing shares, at 28p: a discount of 15.8% to yesterday’s closing price.
Of the £60m to be raised £6m will go on the cost of the CVA including redundancy costs, staff retention and store closures. £12.5m will be used to repay the £12.5m load from major shareholder Meditor and £33m funding the turnaround plan, which Wilf Walsh, Carpetright ceo said will be accelerated.
The annual savings is dependent on the remaining stores picking up 20% of sales from the closed stores. Walsh had previously said stores picked up 40% of sales when a nearby store closed.
The chain will accelerate the rebadging of stores, rather than focusing on those which faced competition from Tapi, and expects to complete this in two years. Marketing will be retimed with the Carpetright brand being promoted following the summer and store closures in an effort to counter publicity about the restructuring.
There will be an increased emphasis on hard flooring: with a target of like for like sales growth of 14% for the next three years. Marketing will highlight that it sells hard flooring.
Shareholders not taking up the placing will see their shareholding reduced by 76.5%.
‘We are delighted to have received such strong support from our shareholders and other investors in achieving this fully underwritten fundraise. 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. 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,’ said Walsh.