According to caterersearch, Coffee Republic is seeking to raise Â£800,000 with a share placing to wipe out its debt and provide working capital.
The coffee shop operator, which now has 200 units, has seen rapid site growth since it switched to a franchising model at the expense of turnover, which slid 39.8% to Â£5.8m in the year to 30 March 2008.
Although in the six months to 28 September 2008 weekly franchise and concession income covered head office costs, the company said its debt â€“ held by Barclays – was still constraining its ability to fund its expansion with cash generated by the business.
Following a â€œdebt compromise arrangementâ€ with Barclays and the creation of 2,666,667 new shares, the company will be, in effect, debt free if the placing is approved by shareholders at an Extraordinary General Meeting on 1 December.
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