Mothercare has insisted it is making “good progress” with its refinancing and restructuring plans – but has placed its Children’s World business into administration.
The embattled retailer said it had received no legal challenges to the CVA proposals for both its Mothercare and Early Learning Centre arms.
It added that the £32.5m capital raising through an equity issue was expected to be completed on July 27. The cash will help Mothercare fund its restructuring plans, which will see it shutter 60 UK stores.
However, the business has placed Children’s World into administration after its CVA plans were rejected by creditors last month.
The administration will see 13 of Children’s World’s 22 stores transferred to other Mothercare group companies in order to continue trading.
Following the closure of 60 Mothercare stores by June 2019, 77 shops will remain open, with 19 of those operating on reduced rent.
The retailer warned that trading continued to be “challenging” in the UK, although it had seen “some stability” in its international operations.
Mothercare’s interim executive chairman Clive Whiley said: “When I joined the business just three months ago, Mothercare faced a bleak future with growing and pressing financial stresses upon the business.
“We have worked tirelessly as a team to get to where we are today and this fully underwritten equity issue marks the end of this initial phase, returning the group to financial stability.”
He added: “Whilst the lack of full approval for the Children’s World CVA was disappointing, we have now found a solution which allows us to go further and faster with the right-sizing of our store portfolio.”
Chief executive Mark Newton-Jones, who made a shock return the helm in May just weeks after he was sacked, said: “We have seen an unprecedented period for UK retail and we have not been alone in facing a number of strong headwinds. I’m pleased to say, however, that we are now in a position to re-focus on our customers and improve the Mothercare brand both in the UK and across the globe.
“We have exciting plans ahead to revitalise the brand through enhancing our product ranges, improving our design and value, developing our digital and multi-channel proposition and investing in our people.”