Shareholder Loan and Strategy Update

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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 £12.5 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:

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 £40 million and £60 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."

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.