Mothercare creditors have approved Company Voluntary Agreement (CVA) proposals for the retailer, which will see up to 50 stores close.
In a statement, Mothercare said it is “not, and will not be, in administration as a result of the approval by creditors of the CVA proposals”.
KPMG was appointed to oversee the CVA process, under which 50 stores have been proposed to close, reducing the UK portfolio by more than a third, decreasing from 137 to 78 by 2020. In addition, Mothercare is seeking rent reductions on 21 stores.
Mothercare also announced it would raise £28m through a refinancing, which it expects to complete in July, comprising a placing and open offer of shares priced at 19 pence per ordinary share.
It said Revised Debt Facilities of £67.5m provided by Mothercare’s existing lenders remained conditional upon, amongst other things, the completion of this new equity issue.
Mothercare interim executive chairman Clive Whiley said: “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.”
Jim Tucker, restructuring partner at KPMG and joint supervisor of the CVA, said: “The approval of these CVAs is a critical component in management’s plans to create a fully refinanced, restructured business that is better equipped to move forward in today’s dynamic omni-channel retail environment.
“As with all CVAs, more than 75% of creditors had to vote in favour in order to pass the resolution. Today’s vote saw the significant majority of all voting creditors choose to approve the proposals.”