Mothercare boss to return in shock U-turn as retailer plans store closures

Mothercare boss to return in shock U-turn as retailer plans store closures

Mothercare's shares had lost 83 percent of their value over the a year ago but rose as much as 34 percent on Thursday after the firm detailed a 113.5 million pounds refinancing, including a 28 million pounds equity raise, and said Mark Newton-Jones would return as CEO.

The UK restructuring measure will see Mothercare exit from 50 stores by June 2019 to achieve a targeted estate of 78 stores by 2020.

There are fears hundreds of jobs could go as Mothercare announces big store closures. Its shares have lost 83 percent of their value over the past year.

In a statement, Mothercare said: "Recent financial performance, impacted in particular by a large number of legacy loss making stores within the United Kingdom estate, has resulted in a perilous financial condition for the group".

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".

The company plans cuts to its United Kingdom shop network under a company voluntary arrangement (CVA), a solution which must be approved by creditors and would also see rent reductions at 21 further outlets.

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The company further added that the United Kingdom restructuring plan will involve an accelerated reduction of the United Kingdom store estate to reduce losses and rent liabilities and will be effected through the CVA Proposals.

Mothercare, which has been trading since 1961, said it was facing a "perilous financial condition" and had identified a large number of loss-making stores.

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

Mothercare now trades from 137 United Kingdom stores but aims to reduce that to 78 by 2020, meaning a further nine stores would close beyond this initial programme.

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.

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