Mothercare is close to agreeing a rescue plan that includes raising fresh funds from investors and revamping its store portfolio.
The company said it was finalising a comprehensive restructuring and refinancing package to put the business on a stable and sustainable financial footing.
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“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,” it said.
Its new chief executive, David Wood, who was parachuted into the job last month, will provide further details on Thursday alongside the group’s full-year results.
Mothercare shares fell by almost 10% to 18.09p in early trading on Monday as the company confirmed it would tap shareholders for cash.
Like other household names on the high street, the childrenswear and maternity retailer has been battling weak consumer spending. Toys R Us and Maplin are among the chains that have gone into administration, with the loss of thousands of jobs.
Shoppers are deserting the high street in greater numbers than during the depths of the recession in 2009, the latest footfall figures from the British Retail Consortium and Springboard suggest.
Mothercare, which has an £80m hole in its pension pot, has been in discussions with its lenders, Barclays and HSBC, since March, when it revealed it was on course to breach the terms of its bank loans and needed extra cash to fund an overhaul of the business. The company is also considering a company voluntary arrangement (CVA) to speed up the closure of underperforming stores.
Mothercare started shutting stores four year ago and has reduced its UK portfolio from 220 to 137, with a target of 80-100. It is also refurbishing remaining outlets.
Carpetright is also using a CVA, a restructuring process designed to stave off administration, to close 92 stores.