TIDMCPR
RNS Number : 3978I
Carpetright PLC
21 March 2018
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM AUSTRALIA, CANADA,
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TO DISTRIBUTE THIS ANNOUNCEMENT
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Carpetright plc
Shareholder Loan, Strategy Update and Total Voting Rights
Shareholder Loan
Carpetright plc, ("Carpetright", the "Company" or, together with
its subsidiary undertakings, the "Group") is pleased to announce
that it has entered into an unsecured loan agreement with Meditor
European Master Fund Limited ("Meditor"), a substantial shareholder
(as defined by the UKLA's Listing Rules) of the Company, to provide
the Company with GBP12.5 million to assist with short-term working
capital requirements (the "Meditor Loan"). Meditor's investment
advisor is Meditor Capital Management Limited.
The key terms of the Meditor Loan are:
Term Detail
-------------- --------------------------------------
Principal GBP12.5 million
-------------- --------------------------------------
Repayment 31 August 2018
date
-------------- --------------------------------------
Interest rate 3.0 per cent. (per annum)
-------------- --------------------------------------
Arrangement GBP1.875 million (of which c.GBP1.379
fee million is to be applied by Meditor
in subscribing for 3,396,200 new
ordinary shares of 1p each in the
capital of the Company at 40.6 pence
per share (being the closing price
per share on 20 March 2018) (the
"Subscription Shares"))
-------------- --------------------------------------
Security Unsecured
-------------- --------------------------------------
The Subscription Shares to be issued by the Company to Meditor
will constitute approximately 5.0 per cent of the issued ordinary
share capital immediately prior to their issue, and will be issued
pursuant to the Company's existing authorities to issue shares on a
non pre-emptive basis.
Application will be made for the Subscription Shares to be
admitted to the premium listing segment of the Official List (the
"Official List") of the Financial Conduct Authority (the "FCA") and
to trading on the main market for listed securities of the London
Stock Exchange plc (the "London Stock Exchange") (together,
"Admission"). Settlement for the Subscription Shares and Admission
is expected to take place on or around 8.00 a.m. on 26 March
2018.
The Meditor Loan has been made to the Company on normal
commercial terms, on an unsecured basis and does not have any
unusual features. As such, the Meditor Loan meets the criteria of
Listing Rule 11.1.6(2) and therefore does not constitute a related
party transaction (as defined in Listing Rule 11). The subscription
by Meditor for the Subscription Shares is a smaller related party
transaction falling within Listing Rule 11.1.10.
Strategy Update
On 1 March 2018, the Company announced that it was examining a
range of options to accelerate the turnaround of the business and
strengthen its balance sheet. Further to that announcement, the
Company announces that it is currently exploring the feasibility of
a company voluntary arrangement (the "CVA"), the objective of which
would be to address the legacy property issue inherited from the
previous leadership by rationalising the Company's property
portfolio in order to improve the long-term prospects of the
business. The Board believes that a CVA would not adversely affect
the Company's ability to serve its customers.
Following the CVA, the Company intends to raise between GBP40
million and GBP60 million through an equity issue. If launched, the
Company expects that the proceeds of the equity issue would be used
to fund the Group's on-going strategy, reduce indebtedness and
cover the costs associated with the CVA.
As part of this process, the Company remains in discussion with
its lenders and will seek to agree amendments to the terms of its
banking facilities, including a relaxation of the Company's
covenants and an extension of the facilities. It is anticipated
that the approval of the CVA will be a condition to any extension
of the facilities.
This process remains ongoing and the Group will update the
market on these initiatives as required.
Total Voting Rights
The Company's enlarged issued share capital immediately
following the issue of the Subscription Shares will be 71,323,943
Ordinary Shares. There are no shares held in treasury and therefore
the total number of voting rights in the Company immediately
following the issue of the Subscription Shares will be 71,323,943.
This figure may be used by shareholders as the denominator for the
calculations by which they will determine if they are required to
notify their interest in, or a change in their interest in, the
share capital of the Company under the Disclosure Guidance and
Transparency Rules.
Wilf Walsh, Chief Executive Officer of Carpetright, 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. The Company has worked hard
over recent years to address this legacy issue and reduce the size
of its property estate, however many of these poor performing
stores still have long leases to run, which has limited our ability
to exit a meaningful number in the short-to-medium term.
"While the Board is confident that its brand investment and
store refurbishment strategies have been, and will continue to be,
successful in enabling Carpetright to respond to increased
competition, it believes additional measures are necessary to
directly address this legacy property issue. The Board is therefore
exploring the feasibility of a CVA in order to expedite the
rationalisation of its property portfolio, with the clear objective
of establishing a right-sized estate of contemporary stores, on
economic rents, complemented with a compelling online offer. The
conditional equity issue, which is intended to follow a successful
CVA, would recapitalise the Group and we believe provide the
necessary funds to accelerate its turnaround and address the
competitive threat from a position of financial strength.
"In the interim, it is very much business as usual for all of
our stores and we look forward to serving customers through the
important Easter trading period. In tandem, we will remain in close
contact with all colleagues to keep them fully informed as we move
through this process."
For further information please
contact:
Carpetright PLC
Wilf Walsh, Chief Executive
Neil Page, Chief Financial Officer 01708 802000
Peel Hunt LLP (Sponsor and joint
broker)
Dan Webster
George Sellar 020 7418 8900
Deutsche Bank AG (Joint broker)
Simon Hollingsworth
Adam Miller 020 7545 8000
Citigate Dewe Rogerson (Financial
PR)
Kevin Smith 020 7638 9571
This announcement does not constitute an offer to sell, or a
solicitation of offers to purchase or subscribe for, securities in
the United States. The securities referred to herein have not been,
and will not be, registered under the US Securities Act of 1933, as
amended (the "Securities Act"), and may not be offered, exercised
or sold in the United States absent registration or an applicable
exemption from registration under the Securities Act.
Peel Hunt LLP ("Peel Hunt") is authorised and regulated by the
FCA and is acting exclusively for the Company and no one else in
relation to the matters referred to herein and is not, and will not
be, responsible to anyone other than the Company for providing the
protections afforded to its clients or for providing advice in
relation to the contents of this document or any other matter
referred to herein.
Deutsche Bank AG, London Branch ("Deutsche Bank") is authorised
under German Banking Law (competent authority: European Central
Bank) and, in the United Kingdom, by the Prudential Regulation
Authority (the "PRA"). It is subject to supervision by the European
Central Bank and by BaFin, Germany's Federal Financial Supervisory
Authority, and is subject to limited regulation in the United
Kingdom by the PRA and the FCA. Details about the extent of its
authorisation and regulation by the PRA, and regulation by the FCA
are available on request or from
www.db.com/en/content/eu_disclosures.html. Deutsche Bank is acting
exclusively for the Company and no one else in connection with the
matters referred to herein, and Deutsche Bank is not, and will not
be, responsible to anyone other than the Company for providing the
protections afforded to its clients or for providing advice in
relation to any matter referred to herein.
No representation or warranty, express or implied, is or will be
made as to, or in relation to, and no responsibility or liability
is or will be accepted by Peel Hunt or Deutsche Bank or by any of
their respective affiliates or agents as to, or in relation to, the
accuracy or completeness of this announcement or any other written
or oral information made available to or publicly available to any
interested party or its advisers, and any liability therefore is
expressly disclaimed.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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