Mothercare’s CVA Plans Approved by Creditors

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Mothercare’s proposed Company Voluntary Arrangement (CVA) has been approved by more than 75% of creditors, although the exact percentage of the vote was not announced.

Any creditor that wants to challenge the CVA has until 29 June 2018 to apply to court.

Mothercare intends to close 50 stores by the end of June 2019 and wants a 50% rent reduction in 21 of its branches for a period of three years.

The last three remaining Early Learning Centre toy shops in Britain are among the 50 stores due to close down, however, ELC products are sold in number of Mothercare stores. When Mothercare purchased ELC for £85 million in 2007 there were over 200 UK branches.

The remaining 66 stores will see their rent, insurance and service charges move to monthly rather than quarterly payment terms for three years.

The store closures will put approximately 800 employees at risk of redundancy but will give the nursery retailer (founded in 1961) a chance of survival.

The public limited company will now seek to raise £28 million by issuing new shares. This is expected to be complete by mid-July, when an extraordinary general meeting will be convened.

Clive Whiley, Interim Executive Chairman, said in a statement: “We are very grateful for the support of our many stakeholders across our creditor base in supporting today’s CVA Proposals. Their forbearance and support today is a crucial step forward to achieve the renewed and stable financial structure for the business that will drive an acceleration of Mothercare’s transformation. These measures provide a solid platform from which to reposition the Group and begin to focus on growth, both in the UK and internationally.”
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