Mothercare has announced as part of a Company Voluntary Agreement (CVA) it will shut 50 of its 137 stores with around 800 jobs axed.
As part of its restructuring plan the parenting retail chain confirmed that a further 21 stores will see a rent reduction.
Former CEO Mark Newton-Jones is being reinstated only a month after his resignation. David Wood, the former Tesco executive who had replaced Newton-Jones will now become Mothercare’s group managing director.
As part of the restructuring, Mothercare has also arranged a refinancing package worth up to £113.5m.
This is made up of a proposed equity capital raising of £28m expected to be launched in July 2018, a revised committed debt facilities of £67.5m, new £8m shareholder loans from certain of the company’s largest shareholders and a new debtor-backed facility of up to £10m from one of the company’s trade partners.
Clive Whiley, the company’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 UK estate, has resulted in an unsustainable situation for the Mothercare brand, meaning the group was in clear need of an appropriate resolution.
“Since my appointment as interim executive chairman, my priority has been to galvanise support from all of our stakeholders and provide a solution to the short-term problems facing the company.
“These comprehensive measures provide a renewed and stable financial structure for the business and will drive a step change in Mothercare’s transformation. The potential for the Mothercare brand in the UK, benefitting from a restructured store estate, and internationally remains significant.
“However, there remains much to do and we must maintain a disciplined focus on cost control and cash generation throughout the business, but these measures provide a solid platform from which to reposition the group and begin to focus on growth, both in the UK and internationally.”