Crisis-hit Mothercare seeks bridging loan

BABYWEAR: Retailer is finalising a refinancing package and stores closure plan

The crisis at Mothercare has deepened after the babywear retailer said it was scrambling for cash from shareholders and outside investors, alongside a sweeping store closure programme.

The troubled chain is widely expected to unveil a restructuring proposal known as a Company Voluntary Agreement (CVA) alongside its annual results on Thursday.

But Mothercare will also tap investors for cash through an equity fundraise, and the business is so desperate for money that it must secure a bridging loan this week.

In a statement, the retailer said: “Mothercare announces that it is now finalising a comprehensive restructuring and refinancing package to put the business on a stable and sustainable financial footing.

“We are in the final stages of detailing these restructuring plans alongside new committed debt facilities, an underwritten equity issue and access to other sources of capital which we intend to announce with our final results.”

It comes ahead of the firm’s full year results, which is likely to see the group post a 95% fall in underlying pre-tax profits to just £1 million in the year to March, according to City analysts. The figure compares with a profit of £19.7m last year.

KPMG has been brought in to secure additional cash from Mothercare’s lenders HSBC and Barclays, and Rothschild is working with the group to secure outside funding.

The CVA, which must be approved by landlords, will allow Mothercare to shut stores and slash rents.

Retailers across the board have been battered by weak consumer confidence off the back of soaring Brexit-fuelled inflation.

They have also had to contend with surging wage costs and eye-watering business rate hikes.

Since January, Toys R Us and Maplin have filed for administration, while fashion retailers such as New Look and Select have embarked on radical store closure programmes.

Mothercare’s shares fell 0.57p (2.85%) to close at 19.40p.

Picture: Steve MacDougall. Mothercare at the Gallagher Retail Park in Dundee.