Mothercare unveils rescue plan as it rehires Mark Newton-Jones as CEO
The mother and baby products retailer is also set to rehire its former chief executive Mark Newton-Jones who will work alongside David Wood, the company’s managing director.
The company is to seek creditor approval for a company voluntary arrangement of three of its UK subsidiaries. The plans to restructure and refinance the business also include a proposed equity capital raising of £28 million, revised committed debt facilities of £67.5 million, and new £8 million shareholder loans from some of the company's largest shareholders. There will also be a new debtor backed facility of up to £10 million from one of Mothercare's trade partners
Plans for the restructuring of the store portfolio will involve accelerating the reduction of the UK store estate to reduce losses and rent liabilities. This will result in the retailer exiting 50 stores and securing rent reductions on a further 21 stores.
In a statement, Mothercare said its financial performance, and the impact of a large number of legacy loss-making stores in the UK estate, had resulted in a “perilous” financial situation for the group and that a CVA was the most viable option to help get the business back on track.
Clive Whiley, Mothercare’s interim executive chairman, added: “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."
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