Mothercare CVA greenlit
Major restructure and refinance sees closure of 50 stores and return of ex-boss Mark Newton-Jones
Mothercare has today unveiled comprehensive measures to refinance and restructure its business and streamline its UK store portfolio through company voluntary arrangements (CVAs) of certain subsidiaries.
The infant and baby retailer is to close 50 of its under performing stores and bring back recently ousted chief executive Mark Newton-Jones as part of the major rescue plan. As part of its now confirmed CVA, the closures will result in around 800 job losses. In the UK, Mothercare employs about 3000 people across 137 stores. It says these measures will allow it to return to a more stable footing, accelerate the transformation of the group and drive it towards a viable and sustainable future.
A refinancing package worth up to £113.5 million will be injected into the company as part of the CVA. It comprises £28 million through an equity capital raising, an extension of its existing debt to £67.5 million, and £18 million in shareholder and trade partner loans.
Clive Whiley, the company's Interim Executive Chairman, said: "The recent financial performance of the business, impacted in particular by a large number of legacy loss making stores within the UK estate, has resulted in an unsustainable situation for the Mothercare brand, meaning the Group was in clear need of an appropriate resolution. Since my appointment as Interim Executive Chairman, my priority has been to galvanise support from all of our stakeholders and provide a solution to the short-term problems facing the Company.
“These comprehensive measures provide a renewed and stable financial structure for the business and will drive a step change in Mothercare's transformation. The potential for the Mothercare brand in the UK, benefitting from a restructured store estate, and internationally remains significant. However, there remains much to do and we must maintain a disciplined focus on cost control and cash generation throughout the business, but these measures provide a solid platform from which to reposition the Group and begin to focus on growth, both in the UK and internationally."