Carpetright has issued shares to raise approximately £60m in net proceeds ahead of a proposed CVA, refurbishment and digital growth.

The balance of spend anticipated is: £6m to cover the additional anticipated costs associated with implementing the CVA; £12.5m for the repayment of the principal amount of the short-term unsecured loan from Meditor entered into on 21st March; and £33m to fund the group’s capital expenditure plans as set out in its revised business plan. The remainder will be used to fund the company's ongoing working capital requirements.

CEO Wilf Walsh says: "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."

The Placing and Open Offer is conditional on, amongst other things, the passing of the Resolutions at Carpetright's general meeting on 6th June, and there being no challenge to the CVA. If the resolutions are passed, it is expected that dealings in the shares will commence at on 8th June.

Carpetright's CVA proposal was approved on 26th April.

Paul Hickman, analyst at Edison Investment Research, comments: “Observers of Carpetright’s £60m Placing and Open Offer today might be questioning what on earth is going to change. Here is a terrestrial retail model from the 1980s asking landlords for lower rents and shareholders for more cash. Is this not throwing good money after bad?

"In fact, what is going on here is really quite radical. Management is open in saying the physical estate had become too large. It has already succeeded in exiting 176 of the 586 stores it had in 2010. Recent competition from Martin Harris’ Tapi has brought the issues into high relief. Under Carpetright’s CVA proposal, it intends to terminate leases early on a further 92 stores, and in addition it is asking landlords to reduce rent on a total of 113 sites.

"A vital part of the new business plan is to upgrade its digital platform using contemporary software that will bring its digital marketing into the 21st century. This is an area of real challenge, with disruptive models like Eve Sleep attacking consumer durable space, once thought of as the last bastion of terrestrial retail.

"This does look like a serious and comprehensive effort to lift Carpetright out of the cycle of decline that has hit other legacy retailers.”