Allied Carpets has held preliminary talks with restructuring specialist Hilco over a potential sale.

Hilco’s private equity business is considering buying the entire shareholding of the business that was put up for sale by its French owner last month, according to The Independent.

A prospectus has been sent out and first round bids for the UK’s second largest floor covering’s retailer are due before the end of the month.

It is believed Hilco has identified value in the retailer, which is largely debt free. Any transaction is likely to see the business continue as a going concern.

A deal, which is said to be progressing slowly, could see some loss making stores closing down. The retailer employs 1,600 employees.

Saint-Maclou, Allied Carpet’s parent since 1999, is said to have appointed Lazard to find a buyer.

In 2007, Allied Carpets made an operating loss of£6.8m, on total sales of£206.9m.

Retail Knowledge Bank’s senior partner Robert Clark said Allied Carpets has been “playing second fiddle to Carpetright over an extended period”.

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