Allied Carpets, second biggest floor-covering retailer in the UK, has opened dialogue with restructuring specialist Hilco over the sale of its loss making chain.

Private equity business of Hilco is considering a proposal for buying entire shareholding of 218-store chain which has been put up for sale by the French owner of Allied Carpets.

Allied Carpets had been underperforming for the last few years. First round bids are due before the end of January.

Allied Carpets’ parent company, Tapis Saint Maclou has appointed private firm Lazard to search for a potential buyer. All three, including Hilco, refused to comment on the news.

Sale of Allied Carpets would have major ramifications for the floor-covering sector which has been struggling hard due to sharp consumer downturn. Allied Carpets rival Floors-2-Go has been already under administration since last summer, while market leader Carpetright has admitted that it is passing through toughest trading conditions ever faced in its history of 50 years.

Hilco has noted that Allied Carpet is largely debt free company, but a potential buyout could lead to closure of some loss-making stores. Allied Carpets, which employs 1,600 staff, does not stand danger of job cuts.

Hilco had made a bid to buy Woolworths in November by taking on up to £300m of Woolworth’s debt. But now it is trying to structure completely different deal for Allied Carpets.

Allied Carpet which did not make operating profit for last 8 years made an operating loss of £6.8m on sales of £206.9m in 2007.

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