Carpetright prepares for store closures in CVA plan

Carpetright is exploring a possible company voluntary agreement (CVA) which would allow it to to speed up the closure of underperforming stores.

The beleaguered flooring retailer has announced it is seeking an insolvency deal to allow it to continue trading while it negotiates rent reductions and debt restructuring.

The number of locations facing the axe has not been revealed though it has been suggested that around 100 are likely to be affected. Carpetright announced the strategy as it confirmed that it had secured £12.5m in funding from one of its shareholders, Meditor.

Alongside considering a CVA, Carpetright has also begun to sell off equity in order to raise funds of between £40m to £60m.

Chief executive Wilf Walsh said: “I am pleased that we have secured this additional support from one of our major shareholders as we continue to explore the feasibility of a CVA and a conditional equity issue. These further cash resources will enable us to make the necessary decisions free from short-term funding pressure.

“The aggressive store opening strategy pursued by the company’s previous leadership has left Carpetright burdened with an oversized property estate consisting of too many poorly located stores on rents which are simply unsustainable.”