The deal comes as part of restructuring and refinancing at Mothercare, with the retailer saying it means ambitions to be debt free by the end of the year had been bolstered. Mothercare said the deal came after it no longer had “the necessary capital, resources or scale” to continue to invest in and develop the brand.
Mothercare told investors £6m from the sale will be received once the deal is completed, with up to £5.5m for inventory assets due within two months of its completion. The Entertainer will pay Mothercare a further £2m over the next two years in earn-out fees. Mothercare said it would retain a further £6m worth of stock in the short term to retain an “arm’s length” concession deal with the toy retailer.
The babywear retailer said its transformation plans were on course, with its UK business to trade from only 80 stores by the end of the month, down from 137 when it secured its CVA. The ELC operates in 400 Mothercare stores worldwide through franchise partners and also online.
Mothercare chief executive, Mark Newton-Jones, said: “This disposal of Early Learning Centre provides a further step towards eliminating our bank debt, and our new concession arrangements with The Entertainer will bring our customers an even stronger toys offer, both in stores and online. We look forward to working with the team at The Entertainer in the years to come.”
The Entertainer founder and executive chairman, Gary Grant, said: “We are delighted to add ELC to The Entertainer family. It comes with a rich history as a much loved British brand, supporting parents and grandparents with their children’s early years’ learning, development and play. We will look to bring new life to the product offering whilst maintaining the high level of quality ELC is renowned for.”