Regional stores at risk as Mothercare seeks CVA approval

Regional stores at risk as Mothercare seeks CVA approval

Shares in Mothercare were up 4.8 pence at 26.6 pence at 0832 GMT, valuing the business at 46 million pounds.

Clive Whiley, Mothercare'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 United Kingdom estate, has resulted in an unsustainable situation for the Mothercare brand, meaning the group was in clear need of an appropriate resolution".

The shake-up aimed at restoring the fortunes of the chain are likely to result in hundreds of job losses.

Mothercare also plans to raise £28m from shareholders through a share placing while it has also extended £67.5m in debt facilities with lenders as well as arranging £18m in credit with investors and trade partners.

The closures could save the company £10 million a year, as well as rent reductions being implemented in a further 71 stores.

"Since my appointment, my priority has been to galvanise support from all of our stakeholders and provide a solution to the short-term problems facing the company".

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'These comprehensive measures provide a renewed and stable financial structure for the business and will drive a step change in Mothercare's transformation.

Commenting on the plan Jonathan Ward, Managing Director of Mothercare Ireland said in a statement: "Mothercare UK have this morning released their refinancing and UK store restructuring plan. However, there remains much to do and we must maintain a disciplined focus".

Meanwhile, in a move that will stun many observers, Mark Newton Jones, who was given the elbow as chief executive last month, will return to the fold and once again take the top job.

Creditor meetings to vote on the CVA proposals are expected to be held on June 1, with the process expected to complete in July.

The mother and baby retailer will see 50 stores close within the year.

The high street chain made the decision due to the current poor climate for retailers that has already seen Toys R Us and Maplin close down this year. Poundworld has considered the option, but is now thought to prefer a trade sale.