ScS Upholstery today suspended its shares after entering into exclusive talks with a buyer to provide the struggling furniture retailer with enough working capital to pay its suppliers.

The company admitted as it suspended its shares at 6.25p, that investors are likely to receive very little from a sale, stating: "...it has become clear to the directors of ScS that the extent of the additional working capital funding required may result in only negligible value being attributed to the shares in ScS Upholstery PLC."

ScS is now worth just £2.2 million.

Earlier this month, it emerged that a credit insurer was refusing to cover suppliers to ScS who are worried that they will not be paid by the furniture chain. Credit insurers provide cover to companies against the risk they will not be paid by customers.

ScS said today that a successful deal with a third party "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."

On May 10, ScS said it had just under £5 million of cash in the bank, though earlier this month David Knight, chief executive at the company, said Barclays was being "supportive" and, as of June 11, the business had still not drawn down any of its £3 million overdraft facility.

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