Sofa retailer gets bid approach

ScS has been looking for extra funds

Loss-making sofa retailer ScS Upholstery has received a takeover approach for a large part of the firm.

The approach for the trading part of the company came from discussions it was having with a number of parties to raise much-needed funding, ScS said.

The Sunderland-based firm has suffered falling sales as consumer spending on larger furniture items has fallen.

Its shares were suspended at 6.5 pence at the company's request. Six months ago, the shares were at 95.25p.

ScS said it was in "exclusive discussions" with an external party following an approach to acquire the entire share capital of its sole trading subsidiary.

"This approach would see the trading subsidiary being provided with substantial working capital facilities that would fully resolve the working capital issues and ensure all suppliers have a strong and ongoing relationship with the business," ScS said in a statement to the stock exchange.

Earlier this month, the sofa retailer said one insurer had withdrawn credit insurance for ScS, which covers its suppliers against non-payment.

The withdrawal had a knock-on effect and affected the working capital facilities of some of its main suppliers, the company said.

In March, ScS Upholstery reported an £8.8m loss for the first half of the trading year. It also said like-for-like orders between the end of January and March 15 were down by 15%.