Mothercare overhaul puts 800 jobs at risk

MOTHERCARE has put 800 jobs in the firing line after a plan to axe 50 stores as part of a sweeping overhaul won the backing of creditors.

The embattled retailer has escaped administration by securing approval for a Company Voluntary Arrangement (CVA), a lifeline which helps businesses cut costs.

The move will shift the baby chain on to firmer financial ground by slashing its 137-strong UK store estate to around 87, while securing rent reductions on a further 21 sites.

Investors cheered the news, sending shares up more than 7pc to 33p in noon trade before they slipped back to 31p.

Interim executive chairman Clive Whiley said the CVA would provide a “solid platform” in which to target growth in the UK and abroad.

He said: “We are very grateful for the support of our many stakeholders across our creditor base in supporting the CVA proposals. Their forbearance and support today is a crucial step forward to achieve the renewed and stable financial structure for the business that will drive an acceleration of Mothercare’s transformation.”

The CVA is part of a far-reaching rescue package that will pull together £113.5m in funds to help revive the ailing firm.

It plans to tap shareholders for £28m through an equity issue to be launched next month, priced at 19p per share. It has also received financial breathing space by extending its debt facility to £67.5m, pinning down £8m of new shareholder loans and signing off a £10m debt-backed facility with a trade partner.

Mothercare has also reinstated chief executive Mark Newton-jones, who was sacked in April.

He spent four years attempting to turn the business around, but was ousted by non-executive chairman Alan Parker who retired last month.