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Carpetright shareholder Meditor buys its debts
27th Aug 2019 08:22
(Sharecast News) - Embattled floor coverings retailer Carpetright said on Tuesday that its largest shareholder, Meditor European Master Fund, will buy its £40.7m revolving credit facility (RCF) from lenders NatWest and AIB.
Carpetright said Meditor's purchase of the RCF and entry into participation agreements in respect of the overdrafts are "at arm's length from the company".
"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.
"Meditor has confirmed it now intends to engage with the company with a view to providing a more stable and longer-term funding platform," it said.
The terms of the revolving credit facility remain unchanged. Carpetright also has an overdraft facility of £6.5m, down from £10m at the time of the full year results as a result of property sales.
Shore Capital analysts Greg Lawless and Clive Black said: "The existing debt facilities needed to be refinanced by December, so the company has dealt with this in a timely manner ahead of the end of calendar year timetable.
"In our view, this is another staging post in the Carpetright recovery following the CVA and rescue rights issue last year, which gave the company a fighting chance to rebuild profits and cashflow to a more sustainable level.
"Carpetright trades on a one year price-to-earnings multiple of 45.0x (recovery multiple) and a lowly EV/EBITDA of 3.2x. The recovery remains work in progress, but we believe it is too early to be more positive and reiterate our hold rating."
At 0820 BST, the shares were up 13% to 15.24p.
Carpetright said Meditor's purchase of the RCF and entry into participation agreements in respect of the overdrafts are "at arm's length from the company".
"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.
"Meditor has confirmed it now intends to engage with the company with a view to providing a more stable and longer-term funding platform," it said.
The terms of the revolving credit facility remain unchanged. Carpetright also has an overdraft facility of £6.5m, down from £10m at the time of the full year results as a result of property sales.
Shore Capital analysts Greg Lawless and Clive Black said: "The existing debt facilities needed to be refinanced by December, so the company has dealt with this in a timely manner ahead of the end of calendar year timetable.
"In our view, this is another staging post in the Carpetright recovery following the CVA and rescue rights issue last year, which gave the company a fighting chance to rebuild profits and cashflow to a more sustainable level.
"Carpetright trades on a one year price-to-earnings multiple of 45.0x (recovery multiple) and a lowly EV/EBITDA of 3.2x. The recovery remains work in progress, but we believe it is too early to be more positive and reiterate our hold rating."
At 0820 BST, the shares were up 13% to 15.24p.